As filed with the Securities and Exchange Commission on February 11, 1997
Registration No. 811-9140
File No. 33-80057
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
Under the
SECURITIES ACT OF 1933 [x]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 4 [x]
and/or
REGISTRATION STATEMENT
Under the
INVESTMENT COMPANY ACT OF 1940 [x]
Amendment No. 6 [x]
(Check appropriate box or boxes.)
Phoenix Duff & Phelps Institutional Mutual Funds
(Exact Name of Registrant as Specified in Charter)
101 Munson Street, Greenfield, MA 01301
(Address of Principal Executive Offices) (Zip Code)
(800) 814-1897
(Registrant's Telephone Number, including Area Code)
Philip R. McLoughlin
Vice Chairman and Chief Executive Officer
Phoenix Duff & Phelps Corporation
56 Prospect Street
Hartford, Connecticut 06115
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[x] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has registered an indefinite number of shares under the Securities
Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act of 1940.
A Form 24f-2 for the fiscal year ended December 31, 1996 will be filed by
Registrant with the Commission on or before February 28, 1997.
<PAGE>
The following pages from Post-Effective Amendment No. 3 to the Registration
Statement on Form N-1A filed with the Securities and Exchange Commission on
September 5, 1996 are incorporated herein by reference thereto:
Cross Reference Sheet to items required by Rule 495(a)
Part A
Prospectus pages 1 through 15.
Part B
Statement of Additional Information pages 1 through 17.
June 30, 1996 Semi-Annual Report
<PAGE>
This Registration Statement contains two prospectuses and Statements of
Additional Information.
These are identified as Version A and Version B.
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
[VERSION B]
Cross Reference Sheet
Pursuant to Rule 495
Under the Securities Act of 1933
PART A
Information Required in Prospectus
<TABLE>
<CAPTION>
Item Number Caption
----------------------------------------------- ---------------------------------------------------------
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Introduction; Fund Expenses
3. Condensed Financial Information Not Yet Applicable
4. General Description of Registrant Introduction; Investment Objectives and Policies;
Investment Techniques and Related Risks; Investment
Restrictions; Management of the Fund
5. Management of the Fund Management of the Fund;
The Custodian and Transfer Agent
6. Capital Stock and Other Securities Management of the Fund; Dividends,
Distributions and Taxes; Additional Information
7. Purchase of Securities Being Offered How to Buy Shares; Net Asset Value;
Distribution Plan; How to Redeem Shares
8. Redemption or Repurchase How to Buy Shares;
How to Redeem Shares
9. Pending Legal Proceedings Not Applicable
</TABLE>
PART B
Information required in Statement of Additional Information
<TABLE>
<CAPTION>
Item Number
-----------------------------------------------
<S> <C> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History The Fund
13. Investment Objectives and Policies Investment Objectives and Policies;
Investment Restrictions; Portfolio Turnover
14. Management of the Registrant Trustees and Officers
15. Control Persons and Principal Holders of Trustees and Officers
Securities
16. Investment Advisory and Other Services Trustees and Officers; Services of the Adviser; Services
of the Administrator; The Distributor; Distribution Plan
17. Brokerage Allocation and other Practices Brokerage Allocation
18. Capital Stock and Other Securities Purchase of Shares; How to Redeem Shares (see Part A, Item 8)
19. Purchase, Redemption and Pricing of Determination of Net Asset Value; Purchase of Shares; How
Securities Being Offered to Redeem Shares (see Part A, Item 8)
20. Tax Status Taxes
21. Underwriter The Distributor; Distribution Plan
22. Calculation of Yield Quotations of Money Performance Information
Market Fund
23. Financial Statements Not Yet Applicable
</TABLE>
<PAGE>
[VERSION B]
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
101 Munson Street
Greenfield, MA 01301
(800) 814-1897
PROSPECTUS
April 1, 1997
Phoenix Duff & Phelps Institutional Mutual Funds (the "Fund") is an open-end
management investment company whose shares are presently offered in seven
separate portfolios. Each portfolio generally operates as a separate fund
with its own investment objectives and policies designed to meet its specific
investment goals. This Prospectus offers only the shares of the Phoenix Real
Estate Equity Securities Portfolio.
The Phoenix Real Estate Equity Securities Portfolio (the "Real Estate
Portfolio") seeks as its investment objective capital appreciation and income
with approximately equal emphasis. It intends under normal circumstances to
invest primarily in marketable securities of publicly traded real estate
investment trusts (REITS) and companies that invest in, operate, develop, and/or
manage real estate located in the United States.
This Prospectus sets forth concisely the information about the Fund that a
prospective investor should know before investing. No dealer, salesperson or
other person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, and, if given
or made, such other information or representations must not be relied upon as
having been authorized by the Fund, Adviser or Distributor. This Prospectus
does not constitute an offer to sell or solicitation of an offer to buy any
of the securities offered hereby in any state in which or to any person whom
it is unlawful to make such offer. Investors should read and retain this
Prospectus for future reference. Additional information about the Fund is
contained in the Statement of Additional Information dated April 1, 1997
which has been filed with the Securities and Exchange Commission and is
available at no charge by calling (800) 814-1897 or by writing to Phoenix
Equity Planning Corporation, 100 Bright Meadow Boulevard, P.O. Box 2200,
Enfield, Connecticut 06083-2200. The Statement of Additional Information is
incorporated herein by reference.
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank, credit union, or affiliated entity and are not
federally insured or otherwise protected by the Federal Deposit Insurance
Corporation (FDIC), the Federal Reserve Board or any other agency and involve
investment risk, including possible loss of principal.
LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION,
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
Page
---------
INTRODUCTION 3
FUND EXPENSES 4
PERFORMANCE INFORMATION 5
INVESTMENT OBJECTIVES AND POLICIES 6
INVESTMENT TECHNIQUES AND RELATED RISKS 7
INVESTMENT RESTRICTIONS 10
MANAGEMENT OF THE FUND 10
DISTRIBUTION PLAN 11
HOW TO BUY SHARES 11
NET ASSET VALUE 12
HOW TO REDEEM SHARES 13
DIVIDENDS, DISTRIBUTIONS AND TAXES 14
ADDITIONAL INFORMATION 14
2
<PAGE>
INTRODUCTION
This Prospectus describes certain of the shares offered by and the
operations of Phoenix Duff & Phelps Institutional Mutual Funds (the "Fund").
The Fund is an open-end management investment company established as a
Massachusetts business trust pursuant to an Agreement and Declaration of
Trust dated December 4, 1995. The Fund presently consists of seven separate
portfolios. Each portfolio has a different investment objective and invests
primarily in certain types of securities and is designed to meet different
investment needs. This Prospectus pertains only to the Phoenix Real Estate
Equity Securities Portfolio (the "Real Estate Portfolio" or "Portfolio").
The investment adviser for the Real Estate Portfolio is Phoenix Realty
Securities, Inc. (the "Adviser"). The Adviser is a wholly-owned indirect
subsidiary of Phoenix Home Life Mutual Insurance Company. For managing or
directing the investments of the Real Estate Portfolio, the Adviser is
entitled to a basic monthly fee equivalent to .45% of the aggregate daily net
assets of such Real Estate Portfolio. In addition, the Adviser shall also be
entitled to an incentive fee to the extent that Portfolio quarterly
performance differs from prescribed benchmarks.
The Distributor and Distribution Plan
Phoenix Equity Planning Corporation ("Equity Planning" or "Distributor"),
serves as national distributor of the Fund's shares. See "Distribution Plan"
and the Statement of Additional Information. Equity Planning also acts as the
Fund's financial agent and transfer agent (the "Transfer Agent").
The Fund has adopted a distribution plan for Class Y Shares pursuant to Rule
12b-1 under the Investment Company Act of 1940, as amended (the "1940 Act").
The distribution plan adopted for Class Y Shares provides that the Fund shall
reimburse the Distributor up to a maximum annual rate of 0.25% of the Fund's
average daily Class Y Share net assets for distribution expenses incurred in
connection with the sale and promotion of Class Y Shares for furnishing
shareholder services. See "Distribution Plan."
Purchase of Shares
The Real Estate Portfolio is currently authorized to offer two classes of
shares on a continuous basis. Class X Shares and Class Y Shares are both
available to Plans (as hereafter defined) and institutional investors which
initially purchase shares whose net asset value equals or exceeds $250,000.
The minimum subsequent investment for each class is $100. "Plans" are defined
as corporate, public, union and governmental pension plans. Shares of each
class represent an identical interest in the investment portfolio of the Real
Estate Portfolio, and generally have the same rights except that Class Y
Shares bear the cost of higher distribution fees which cause the Class Y
Shares to have a higher expense ratio and to receive lower dividends than
Class X Shares. See "How To Buy Shares."
Redemption of Shares
Shares may be redeemed at any time at the net asset value per share next
computed after receipt of a redemption request by the Transfer Agent. See
"How to Redeem Shares."
Risk Factors
There can be no assurance that the Real Estate Portfolio will achieve its
investment objective. Although the Real Estate Portfolio does not invest
directly in real property, it does invest primarily in securities
concentrated in and directly related to the real estate industry and may
therefore be subject to certain risks associated with the ownership of real
estate and with the real estate industry in general. The Real Estate
Portfolio is non-diversified, and therefore its value is potentially more
susceptible to adverse developments affecting the real estate industry. The
risk factors relevant to investment in the Real Estate Portfolio should be
reviewed and are set forth in the "Investment Objectives and Policies" and
"Investment Techniques and Related Risks" sections of this Prospectus and
Statement of Additional Information.
3
<PAGE>
FUND EXPENSES
The following table illustrates all pro-forma expenses and fees that a
shareholder is expected to incur.
<TABLE>
<CAPTION>
Real Estate Portfolio
--------------------------------------
Class X Shares Class Y Shares
- ------------------------------------------------------------------- ------------------ ------------------
[Pro-forma] [Pro-forma]
<S> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases (as a percentage of
offering price) None None
Maximum Sales Load Imposed on Reinvested Dividends None None
Deferred Sales Load None None
Redemption Fees None None
Exchange Fee None None
Annual Fund Operating Expenses (as a percentage of average net
assets)
Management Fees 0.45% 0.45%
12b-1 Fees None 0.25%
Other Operating Expenses (After Reimbursement) 0.40%(a) 0.40%(b)
Total Fund Operating Expenses 0.85% 1.10%
</TABLE>
(a) Phoenix Realty Securities, Inc. has voluntarily agreed to reimburse or
waive Other Operating Expenses of Class X Shares of the Real Estate
Portfolio, excluding interest, taxes, brokerage fees, commissions and
extraordinary expenses until December 31, 1997 to the extent that such
expenses exceed .40% of the average annual net asset values. Other Operating
Expenses for the Real Estate Portfolio are estimated to be .82 absent such
reimbursement or waiver, and Total Operating Expenses are estimated to be 1.27%
absent such reimbursement or waiver.
(c) Phoenix Realty Securities, Inc. has voluntarily agreed to reimburse or
waive Other Operating Expenses of Class Y Shares of the Real Estate
Portfolio, excluding interest, taxes, brokerage fees, commissions and
extraordinary expenses until December 31, 1997 to the extent that such
expenses exceed 0.40% of the average annual net asset values. Other Operating
Expenses for the Real Estate Portfolio are estimated to be 1.07 absent such
reimbursement or waiver, and Total Operating Expenses are estimated to be 1.52%
absent such reimbursement or waiver.
Cumulative Expenses
Paid for the Period
Example* 1 year 3 years
- ---------------------------------------------- ----------- ----------
An investor would pay the following expenses
on a $1,000 investment assuming (1) 5% annual
return and (2) redemption at the end of each
time period:
Real Estate Portfolio
Class X Shares 9 27
-- --
Class Y Shares 11 35
-- --
*The purpose of the table above is to help the investor understand the
various costs and expenses that the investor will bear directly or
indirectly. The example should not be considered a representation of past or
future expenses. Actual expenses may be greater or less than those shown.
For additional information regarding various costs and expenses, see
"Management of the Fund," and "How to Buy Shares."
4
<PAGE>
PERFORMANCE INFORMATION
The Fund may, from time to time, include the performance history of the Real
Estate Portfolio (and each Class thereof) in advertisements, sales literature
or reports to current or prospective shareholders. Both yield and total
return figures are computed separately for Class X and Class Y Shares in
accordance with formulas specified by the Securities and Exchange Commission.
Standardized quotations of average annual total return for each class of
shares will be expressed in terms of the average annual compounded rate of
return of a hypothetical investment in either Class X or Class Y Shares over
a period of 1, 5, and 10 years (or up to the life of the class of shares).
Standardized total return quotations reflect the deduction of a proportional
share of each Class's expenses (on an annual basis), and assume that all
dividends and distributions are reinvested when paid. It is expected that the
performance of Class X Shares shall be better than that of Class Y Shares as
a result of lower distribution fees and certain incrementally lower expenses
paid by Class X Shares. The Fund may also quote supplementally a rate of
total return over different periods of time by means of aggregate, average,
and year-by-year or other types of total return figures.
Yield will be computed by dividing the Portfolio's net investment income
over a 30-day period by an average value of invested assets (using the
average number of shares entitled to receive dividends and the maximum
offering price per share at the end of the period), all in accordance with
applicable regulatory requirements. Such amount will be compounded for six
months and then annualized for a twelve-month period to derive the
Portfolio's yield for each class.
The Portfolio may from time to time include in advertisements information
containing total return and the ranking of those performance figures relative
to such figures for groups of mutual funds having similar investment
objectives as categorized by ranking services such as Lipper Analytical
Services, Inc., CDA Investment Technologies, Inc., Weisenberger Financial
Services, Inc. and rating services such as Morningstar, Inc. Additionally,
the Portfolio or a Class of the Portfolio may compare its performance results
to other investment or savings vehicles (such as certificates of deposit) and
may refer to results published in various publications such as Changing
Times, Forbes, Fortune, Money, Barrons, Business Week and Investor's Daily,
Stanger's Mutual Fund Monitor, The Stanger Register, Stanger's Investment
Adviser, The Wall Street Journal, Pensions & Investments, Institutional
Investor, REIT Watch, The New York Times, Consumer Reports, Registered
Representative, Financial Planning, Financial Services Weekly, Financial
World, U.S. News and World Report, Standard and Poors The Outlook, and
Personal Investor. The Portfolio may, from time to time, illustrate the
benefits of tax deferral by comparing taxable investments to investments made
through tax-deferred retirement plans. The total return may also be used to
compare the performance of the Portfolio against certain widely acknowledged
outside standards or indices for stock and bond market performance, such as
the Standard & Poor's 500 Stock Index (the "S&P 500"), Consumer Price Index,
Shearson Lehman Corporate Index and Shearson Lehman T-Bond Index. The S&P 500
is a commonly quoted market value-weighted and unmanaged index showing the
changes in the aggregate market value of 500 stocks relative to the base
period 1941-43. The S&P 500 is composed almost entirely of common stocks of
companies listed on the New York Stock Exchange, although the common stocks
of a few companies listed on the American Stock Exchange or traded
over-the-counter are included. The 500 companies represented include 400
industrial, 60 transportation and 40 financial services concerns. The S&P 500
represents about 80% of the market value of all issues traded on the New York
Stock Exchange.
Advertisements, sales literature and other communications may contain
information about the Fund or Adviser's current investment strategies and
management style. Current strategies and style may change to respond to a
changing market and economic conditions. From time to time, the Fund may
discuss specific portfolio holdings or industries in such communications. To
illustrate components of overall performance, the Fund may compare the
Portfolio's equity or bond return figure to well-known indices of market
performance including but not limited to the Standard & Poor's 500 Stock
Index, Dow Jones Industrial Average, and Salomon Brothers Corporate and
Government Bond Indices, Russell 2000, Shearson Lehman Bond Index, Wilshire
Real Estate Securities Index, NAREIT Equity Total Return Index, NAREIT Combined
Index, and NCREIF Property Index.
The NCREIF Property Index is produced by the National Council of Real Estate
Investment Fiduciaries (NCREIF) and measures the historical performance of
income-producing properties owned by commingled funds on behalf of qualified
pension and profit-sharing trusts, or owned directly by these trusts and managed
on a separate account basis. Properties in the NCREIF Property Index are
unleveraged and the figures represent gross returns before advisory fees. The
NAREIT Combined Index and NAREIT Equity Total Return Index are published by the
National Association of Real Estate Investment Trusts (NAREIT). The NAREIT
Combined Index is comprised of all publicly-traded equity, mortgage or hybrid
REITs. The NAREIT Equity Total Return Index is comprised of all publicly-traded
Equity REITs. The Wilshire Securities Index measures the investment
characteristics of publicly traded real estate securities such as REITs, real
estate operating companies and partnerships.
Performance information for the Portfolio (and each Class thereof) reflects
only the performance of a hypothetical investment in a Class X Shares or
Class Y Shares of the Portfolio during the particular time period in which
the calculations are based. Performance information is not an indication of
future performance. Performance information should be considered in
5
<PAGE>
light of the Portfolio's investment objectives and policies, characteristics
and qualities of the Portfolio, and the market conditions during the given
time period, and should not be considered as a representation of what may be
achieved in the future. For a description of the methods used to determine
total return, see the Statement of Additional Information.
The Fund's Annual Report, available upon request and without charge, shall
contain a discussion of the performance of the Portfolio and a comparison of
that performance to a securities market index.
INVESTMENT OBJECTIVES
AND POLICIES
The Real Estate Portfolio seeks as its investment objective capital
appreciation and income with approximately equal emphasis. It intends under
normal circumstances to invest primarily in marketable securities of publicly
traded real estate investment trusts (REITs) and stocks of companies that are
principally engaged in the real estate industry. Under normal circumstances,
the Real Estate Portfolio intends to invest at least 75% of the value of its
assets in these securities. The Portfolio has adopted a policy to concentrate
its investments in the real estate industry.
The investment objective of the Real Estate Portfolio is a fundamental
policy which may not be changed without the approval of a vote of a majority
of the outstanding shares of the Real Estate Portfolio. Risks are inherent in
the ownership of any security and there can be no assurance that the Real
Estate Portfolio will achieve its investment objective. The investment
policies of the Real Estate Portfolio will also affect the rate of portfolio
turnover. A high rate of portfolio turnover generally involves
correspondingly greater brokerage commissions or transaction costs, which are
paid directly by the Fund. The portfolio turnover rate for the Real Estate
Portfolio is not anticipated to exceed 75%.
Policies and limitations are considered at the time of purchase and the sale
of instruments is not required in the event of a change in circumstances.
REITs are pooled investment vehicles which invest primarily in income
producing real estate or real estate related loans or interests. Generally,
REITs can be classified as equity REITs, mortgage REITs or hybrid REITs.
Equity REITs invest the majority of their assets directly in real property
and derive income primarily from the collection of rents. Equity REITs can
also realize capital gains by selling properties that have appreciated in
value. Mortgage REITs invest the majority of their assets in real estate
mortgages and derive some income from the collection of interest payments.
Hybrid REITs combine the characteristics of both equity REITs and Mortgage
REITs. The Real Estate Portfolio intends to emphasize investment in equity
REITs.
In determining whether an issuer is "principally engaged" in the real estate
industry, Adviser seeks companies which derive at least 50% of their gross
revenues or net profits from the ownership, development, construction,
financing, management or sale of commercial, industrial or residential real
estate. The equity securities of real estate companies considered for
purchase by the Real Estate Portfolio will consist of shares of beneficial
interest, marketable common stock, rights or warrants to purchase common
stock, and securities with common stock characteristics such as preferred
stock and debt securities convertible into common stock.
The Real Estate Portfolio may also invest up to 25% of its total assets in
(a) marketable debt securities of companies principally engaged in the real
estate industry, (b) mortgage-backed securities such as mortgage
pass-through certificates, real estate mortgage investment conduit ("REMIC")
certificates and collateralized mortgage obligations ("CMOs") (see
"Investment Techniques and Related Risks"); or (c) short-term investments.
The Real Estate Portfolio may invest in debt securities only if, at the date
of investment, they are rated within the four highest grades as determined by
Moody's Investors Services, Inc. (Aaa, Aa, A or Baa) or by Standard & Poor's
Corporation (AAA, AA, A or BBB) or, if not rated or rated under a different
system, are judged by Adviser to be of equivalent quality to debt securities
so rated. Securities rated Baa or BBB are medium grade investment obligations
that may have speculative characteristics. Changes in economic conditions or
other circumstances are more likely to lead to a weakened capacity to make
principal and interest payments in the case of such obligations than is the
case for higher grade securities. The Real Estate Portfolio may, but is not
obligated to, dispose of debt securities whose credit quality falls below
investment grade. Unrated debt securities may be less liquid than comparable
rated debt securities and may involve somewhat greater risk than rated debt
securities.
For temporary defensive purposes (as when market conditions in real estate
securities are extremely adverse such that Adviser believes there are
extraordinary risks associated with investment therein), the Real Estate
Portfolio may invest up to 100% of its total assets in short-term investments
such as money market instruments consisting of securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities;
repurchase agreements; certificates of deposit and bankers' acceptances
issued by banks or savings and loan associations having net assets of at
least $500 million as of the end of their most recent fiscal year; high-grade
commercial paper rated, at time of purchase, in the top two categories by a
national rating agency or determined to be of comparable quality by Adviser
at the time of purchase.
Risk Considerations
The Real Estate Portfolio is non-diversified under the federal securities
laws. As a non-diversified portfolio, there is no restriction under the 1940
Act on the percentage of assets that may be invested at any time in the
securities of any one issuer. To the extent that the Real Estate Portfolio is
not fully diversified, it may be more susceptible to adverse economic,
political or regulatory developments affecting a single issuer
6
<PAGE>
than would be the case if it were more broadly diversified. In addition,
investments by the Real Estate Portfolio in securities of companies providing
mortgage servicing will be subject to the risks associated with refinancings
and their impact on servicing rights.
Although the Real Estate Portfolio does not invest directly in real estate,
it does invest primarily in real estate securities and accordingly
concentrates its investment in the real estate industry. Accordingly, the
value of shares of the Real Estate Portfolio will fluctuate in response to
changes in economic conditions within the real estate industry. Risks
associated with the direct ownership of real estate and with the real estate
industry in general include, among other things, possible declines in the
value of real estate; risks related to general and local economic conditions;
possible lack of availability of mortgage funds; over-building; extended
vacancies of properties; increases in competition, property taxes and
operating expenses; changes in zoning laws; costs resulting from the clean-up
of, and liability to third parties for damages resulting from, environmental
problems; casualty or condemnation losses; uninsured damages from flood,
earthquakes or other natural disasters; limitations on and variations in
rents; dependency on property management skill; the appeal of properties to
tenants; and, changes in interest rates. The Real Estate Portfolio may also
invest in mortgage-backed securities as described above. The risks
associated with such securities are described in the section "Mortgage-
Related Securities".
Investing in REITs involves certain unique risks in addition to those risks
associated with investing in the real estate industry in general. Equity
REITs may be affected by changes in the value of the underlying property
owned by the REITs, while mortgage REITs may be affected by the quality of
any credit extended. REITs are dependent upon management skills, are not
diversified, and are subject to the risks of financing projects. As the Real
Estate Portfolio may invest in new or unseasoned REIT issuers, it may be
difficult or impossible for Adviser to necessarily ascertain the value of
each of such REIT's underlying assets, management capabilities and growth
prospects. In addition, REITs are subject to heavy cash flow dependency,
default by borrowers, self-liquidation, and the possibilities of failing to
qualify for the exemption from tax or distributed income under the Internal
Revenue Code of 1986, as amended (the "Code") and failing to maintain their
exemptions from the 1940 Act. REITs whose underlying assets include long-term
health care properties, such as nursing, retirement and assisted living
homes, may be impacted by federal regulations concerning the health care
industry. The Real Estate Portfolio will indirectly bear its proportionate
share of any expenses paid by REITs in which it invests in addition to the
expenses paid by the Real Estate Portfolio itself.
REITs (especially mortgage REITs) are subject to interest rate risks. When
interest rates decline, the value of a REIT's investment in fixed rate
obligations usually rises. Conversely, when interest rates rise, the value of
a REIT's investment in fixed rate obligations can be expected to decline. In
contrast, as interest rates on adjustable rate mortgage loans are reset
periodically, yields on a REIT's investment in such loans will gradually
align themselves to reflect changes in market interest rates, causing the
value of such investments to fluctuate less dramatically in response to
interest rate fluctuations than would investments in fixed rate obligations.
In addition, investing in REITs involves risk similar to those associated
with investing in small capitalization companies. REITs may have limited
financial resources, may trade less frequently and in a limited volume and
may be more subject to abrupt or erratic price movements than larger
capitalization stocks included in the S&P 500 Index.
The Portfolio commenced operations on April 1, 1997 based upon an initial
capitalization of $5 million provided by Phoenix Home Life. The ability of
the Portfolio to raise additional capital for investment purposes may
directly affect the spectrum of portfolio holdings and performance.
INVESTMENT TECHNIQUES AND RELATED RISKS
In addition to the investment policies described above, the Real Estate
Portfolio may utilize the following investment practices or techniques:
"When issued" and "delayed delivery" Securities
The Real Estate Portfolio may purchase and sell securities on a "when
issued" and "delayed delivery" basis. The Real Estate Portfolio accrues no
income on such securities until the Real Estate Portfolio actually takes
delivery of such securities. These transactions are subject to market
fluctuation; the value of the securities at delivery may be more or less than
their purchase price. The yields generally available on comparable securities
when delivery occurs may be higher than yields on the securities obtained
pursuant to such transactions. Because the Real Estate Portfolio relies on
the buyer or seller to consummate the transaction, failure by the other party
to complete the transaction may result in the Portfolio missing the
opportunity of obtaining a price or yield considered to be advantageous. The
Real Estate Portfolio will engage in "when issued" and "delayed delivery"
transactions for the purpose of acquiring securities consistent with the
Portfolio's investment objective and policies and not for the purpose of
investment leverage.
Securities Lending
The Real Estate Portfolio may lend its securities to brokers, dealers and
financial institutions provided that the market value of the securities
subject to any such loans does not exceed 25% of the value of the total
assets (taken at market value) of the Portfolio; and receive, as collateral,
cash or cash equivalents which at all times while the loan is outstanding,
will be maintained in amounts equal to at least 102% of the current market
value of the loaned securities. Any cash collateral will be invested in
short-term securities. All fees or charges earned from securities lending
will inure to the benefit of the Real Estate Portfolio. The Real Estate
Portfolio will have
7
<PAGE>
the right to regain record ownership of loaned securities within six business
days and to exercise beneficial rights such as voting rights and subscription
rights. While a securities loan is outstanding, the Real Estate Portfolio
will receive amounts equal to any interest or other distributions with
respect to the loaned securities. Any agreement to lend securities shall
provide that borrowers are obligated to return the identical securities or
their equivalent at termination of the loan and, that the Real Estate
Portfolio shall have the right to retain any collateral or use the same to
purchase equivalent securities should the borrower fail to return securities
as required. Lending portfolio securities involves a risk of delay in the
recovery of the loaned securities and possibly the loss of the collateral if
the borrower fails financially. See the Statement of Additional Information.
Illiquid Securities
The Real Estate Portfolio may invest up to 15% of its net assets, taken at
market values at the time of investment, in "illiquid securities". For this
purpose, illiquid securities include any securities for which market
quotations are not readily available, or other securities which legally or in
the Adviser's or Trustees' opinion may be deemed illiquid. Such investments
may include repurchase agreements with deemed maturities in excess of seven
days, certain private placements and certain Rule 144A Securities (as
discussed below). Among other risks unique to certain illiquid securities (as
described elsewhere in this Prospectus and Statement of Additional
Information), illiquid securities may be thinly or not actively traded, and
as a result, the Real Estate Portfolio may experience difficulties in valuing
or disposing of these securities.
Short-Term Instruments
Short term investments will be in high grade short term securities such as
commercial paper, drafts, notes payable upon demand or having maturities
varying from one day to 397 days, municipal notes, Bankers' Acceptances,
Certificates of Deposit or any other form of short term security but may also
include cash should such a holding appear to be consistent with the goal of
maximizing earnings. It is intended that commercial paper held by the Real
Estate Portfolio will be rated A-1 by Standard & Poor's Corporation or P-1 by
Moody's Investors Service, Inc. or, if unrated, be issued by companies with
an outstanding debt issue currently rated at least AA by Standard & Poor's
Corporation or Aa by Moody's Investors Service, Inc. Certificates of Deposits
must be issued by banks which have capital, surplus and undivided profits of
at least $100,000,000.
Mortgage-Related Securities
The Real Estate Portfolio may invest in securities that directly or
indirectly represent a participation in, or are secured by and payable from,
mortgage loans secured by real property ("Mortgage-Related Securities").
These instruments are referred to as "derivatives" as their value is derived
from the value of the underlying security or securities. The Mortgage-Related
Securities in which the Real Estate Portfolio may invest include those with
fixed, floating and variable interest rates and those with interest rates
that change based on multiples of changes in interest rates. Although certain
Mortgage-Related Securities are guaranteed by a third party or otherwise
similarly secured, the market value of the security, which may fluctuate, is
not so secured. If the Real Estate Portfolio purchases a Mortgage-Related
Security at a premium, all or part of the premium may be lost if there is a
decline in the market value of the security, whether resulting from changes
in interest rates or prepayments in the underlying mortgage collateral. As
with other interest-bearing securities, the prices of certain
Mortgage-Related Securities are inversely affected by changes in interest
rates, while other securities which the Real Estate Portfolio may purchase
may be structured so that their interest rates will fluctuate inversely (and
thus their price will increase as interest rates rise and decrease as
interest rates fall) in response to changes in interest rates. Though the
value of a Mortgage-Related Security may decline when interest rates rise,
the converse is not necessarily true, since in periods of declining interest
rates the mortgages underlying the security are more likely to prepay. For
this and other reasons, a Mortgage-Related Security's stated maturity may be
shortened by unscheduled prepayments on the underlying mortgages, and,
therefore, it is not possible to predict accurately the security's return. In
addition, regular payments received in respect of Mortgage-Related
Securities include both interest and principal. If the underlying mortgage
securities experience greater than anticipated prepayments of principal, the
Real Estate Portfolio may fail to fully recoup its initial investment in
these securities even if the securities are rated in the highest rating
category by a nationally recognized statistical rating organization. No
assurance can be given as to the return the Portfolio will receive when these
amounts are reinvested.
The Real Estate Portfolio may also invest up to 25% of its total assets in
mortgage-backed securities such as mortgage pass-through certificates, real
estate mortgage investment conduit ("REMIC") certificates and collateralized
mortgage obligations ("CMOs"). CMOs are derivative securities or
"derivatives" and are hybrid instruments with characteristics of both
mortgage-backed and mortgage pass-through securities. Similar to a bond,
interest and pre-paid principal on a CMO are paid, in most cases,
semiannually. CMOs may be collateralized by whole mortgage loans but are more
typically collateralized by portfolios of mortgage pass-through securities
guaranteed by Government National Mortgage Association (GNMA) or the Federal
National Mortgage Association. CMOs are structured into multiple classes,
with each class bearing a different stated maturity. Monthly payments of
principal, including prepayments, are first returned to investors holding the
shortest maturity class; investors holding the longer maturity classes
receive principal only after the first class has been retired. REMICs are
similar to CMOs and are fixed pools of mortgages with multiple classes of
interests held by investors.
The Real Estate Portfolio may also invest in pass-through securities that
are derived from mortgages. A pass-through
8
<PAGE>
security is formed when mortgages are pooled together and undivided interests
in the pool or pools are sold. The cash flow from the mortgages is passed
through to the holders of the securities in the form of periodic payments of
interest, principal and prepayments (net of a service fee).
The Real Estate Portfolio may purchase pass-through securities at a premium
or at a discount. The values of pass-through securities in which the Real
Estate Portfolio may invest will fluctuate with changes in interest rates.
The value of such securities varies inversely with interest rates, except
that when interest rates decline, the value of pass-through securities may
not increase as much as other debt securities because of the prepayment
feature. Changes in the value of such securities will not affect interest
income from those obligations but will be reflected in the Real Estate
Portfolio's net asset value.
A particular risk associated with pass-through securities involves the
volatility of prices in response to changes in interest rates, or prepayment
risk. Prepayment rates are important because of their effect on the yield and
price of securities. Prepayments occur when the holder of an individual
mortgage prepays the remaining principal before the mortgage's scheduled
maturity date. As a result of the pass-through of prepayments of principal
on the underlying securities, mortgage-backed securities are often subject to
more rapid prepayment of principal than their stated maturity would indicate.
Although the pattern of prepayments is estimated and reflected in the price
paid for pass-through securities at the time of purchase, the actual
prepayment behavior of mortgages cannot be known at that time. Therefore, it
is not possible to predict accurately the realized yield or average life of a
particular issue of pass-through securities. Prepayments that occur faster
than estimated adversely affect yields for pass-throughs purchased at a
premium (that is, a price in excess of principal amount) and may cause a loss
of principal because the premium may not have been fully amortized at the
time the obligation is repaid. The opposite is true for pass-throughs
purchased at a discount. Furthermore, the proceeds from prepayments usually
are reinvested at current market rates, which may be higher than, but are
usually lower than, the rates earned on the original pass-through
securities. Prepayments on a pool of mortgage loans are influenced by a
variety of economic, geographic, social and other factors, including changes
in mortgagors' housing needs, job transfers, unemployment, mortgagors' net
equity in the mortgaged properties and servicing decisions. Generally,
however, prepayments on fixed rate mortgage loans will increase during a
period of falling interest rates and decrease during a period of rising
interest rates. Mortgage-backed securities may decrease in value as a result
of increases in interest rates and may benefit less than other fixed income
securities or decline in value from declining interest rates because of risk
of prepayment.
The Real Estate Portfolio may also invest in securities issued by corporate
and other special purpose entities in which the source of income payments on
the securities is a dedicated pool of assets ("Asset-Backed Securities"). The
securitization techniques used for Asset-Backed Securities are similar to
those used for Mortgage-Related Securities. The collateral for these
securities has included home equity loans, automobile and credit card
receivables, boat loans, computer leases, airplane leases, mobile home loans,
recreational vehicle loans and hospital and other account receivables.
Financial Futures and Related Options
The Real Estate Portfolio may enter into financial futures contracts and
related options. These instruments are referred to as "derivatives" as their
value is derived from the value of the underlying security or securities. The
Real Estate Portfolio may purchase and sell financial futures contracts which
are traded on a recognized exchange or board of trade and may purchase
exchange- or board-traded put and call options on financial futures contracts
as a hedge against anticipated changes in the market value of its portfolio
securities or securities which it intends to purchase.
The Real Estate Portfolio will engage in transactions in financial futures
contracts and related options only for hedging purposes and not for
speculation. In addition, the Real Estate Portfolio will not purchase or sell
any financial futures contract or related option if, immediately thereafter,
the sum of the margin deposits initially committed with respect to the
Portfolio's existing futures and related options positions and the premiums
paid for related options would exceed 2% of the market value of the
Portfolio's total assets. At the time of purchase of a futures contract or a
call option on a futures contract, any asset, including equity securities and
non-investment grade debt so long as the asset is liquid, unencumbered and
marked to market daily equal to the market value of the futures contract
minus the Real Estate Portfolio's initial margin deposit with respect thereto
will be deposited in a segregated account with the Portfolio to collateralize
fully the position and thereby ensure that it is not leveraged.
Engaging in transactions in financial futures contracts involves certain
risks, such as the possibility of an imperfect correlation between futures
market prices and cash market prices and the possibility that the Adviser
could be incorrect in its expectations as to the direction or extent of
various interest rate movements, in which case the Real Estate Portfolio's
return might have been greater had hedging not taken place. There is also the
risk that a liquid secondary market may not exist. The risk in purchasing an
option on a financial futures contract is that the Real Estate Portfolio will
lose the premium it paid. There may also be circumstances when the purchase
of an option on a financial futures contract would result in a loss to the
Real Estate Portfolio while the purchase or sale of the contract would not
have resulted in a loss. Futures and options may fail as hedging techniques
in cases where the price movements of the securities underlying the options
and futures do not follow the price movements of the portfolio securities
subject to the hedge. Financial losses relating to futures and options are
potentially unlimited.
Repurchase Agreements
The Real Estate Portfolio may agree to purchase portfolio securities subject
to the seller's agreement to repurchase them at
9
<PAGE>
a mutually agreed upon date and price. The Real Estate Portfolio will enter
into such repurchase agreements only with financial institutions that are
deemed to be creditworthy by the Adviser. During the term of any repurchase
agreement, the Adviser will continue to monitor the creditworthiness of the
seller. Although the securities subject to repurchase agreements may bear
maturities exceeding thirteen months, the Real Estate Portfolio does not
presently intend to enter into repurchase agreements with deemed maturities
in excess of seven days. If in the future the Real Estate Portfolio were to
enter into repurchase agreements with deemed maturities in excess of seven
days, the Portfolio would do so only if such investment, together with other
illiquid securities, did not exceed 15% of the value of the Portfolio's net
assets. Default or bankruptcy of the seller would, however, expose the Real
Estate Portfolio to possible delay in connection with the disposition of the
underlying securities or loss to the extend that proceeds from a sale of the
underlying securities were less than the repurchase price under the
agreement.
Private Placements and Rule 144A Securities
The Real Estate Portfolio may purchase securities which have been privately
issued or are issued by newly established emerging entities and are subject
to legal restrictions on resale or which are issued to qualified
institutional investors under special rules adopted by the Securities and
Exchange Commission ("SEC"). Such securities may offer higher yields than
comparable publicly traded securities. Such securities ordinarily can be sold
by the Portfolio in secondary market transactions to certain qualified
investors pursuant to rules established by the SEC, in privately negotiated
transactions to a limited number of purchasers or in a public offering made
pursuant to an effective registration statement under the Securities Act of
1933 as amended (the "1933 Act"). Public sales of such securities by the
Portfolio may involve significant delays and expense. Private sales often
require negotiation with one or more purchasers and may produce less
favorable prices than the sale of similar unrestricted securities. Public
sales generally involve the time and expense of the preparation and
processing of a registration statement under the 1933 Act (and the possible
decline in value of the securities during such period) and may involve the
payment of underwriting commissions. In some instances, the Portfolio may
have to bear certain costs of registration in order to sell such shares
publicly.
INVESTMENT RESTRICTIONS
The Real Estate Portfolio has adopted fundamental policies, which may not be
changed without the requisite shareholder vote, with regard to the issuance
of senior securities, short sales, the borrowing of money, the underwriting
of securities of other issuers, concentration of investments in particular
industries (other than real estate), the purchase and sale of real estate,
commodities and futures contracts, and the making of loans. These
restrictions are more particularly described in the Statement of Additional
Information.
MANAGEMENT OF THE FUND
The Fund is a mutual fund, known as an open-end, investment company. The
Board of Trustees supervises the business affairs and investments of the
Fund, which is managed on a daily basis by each portfolio's investment
adviser. The Fund was organized as a Massachusetts business trust on December
4, 1995. The Fund commenced operations on March 1, 1996. The Fund is
currently authorized to offer shares of beneficial interest in series and is
currently offering shares of seven portfolios. Two classes of shares are
currently offered by each portfolio.
The Adviser
The investment adviser to the Real Estate Portfolio is Phoenix Realty
Securities, Inc., which is located at 38 Prospect Street, Hartford,
Connecticut 06115. The Adviser was formed in 1994 as an indirect subsidiary
of Phoenix Home Life Mutual Insurance Company ("Phoenix Home Life"). As of
December 31, 1996, the Adviser had approximately $1.4 billion in assets under
management. Phoenix Home Life is a mutual insurance company engaged in the
insurance and investment businesses. Phoenix Home Life's principal place of
business is located at One American Row, Hartford, Connecticut.
The Adviser continuously furnishes an investment program for the Real Estate
Portfolio and manages the investment and reinvestment of the assets subject
at all times to the supervision of the Trustees. The Adviser is responsible
for monitoring the services provided to the Portfolio. Under the terms of the
Investment Advisory Agreement, the Adviser is entitled to a prescribed fee.
For managing, or directing the management, of the investments of the Real
Estate Portfolio, the Adviser is entitled to a basic monthly fee at the annual
rate of .45% of the average daily net asset value of the Portfolio. Such basic
monthly fee is subject to a performance adjustment based on the Portfolio's
Class X Share annual performance as compared to certain prescribed benchmarks.
The basic monthly fee will therefore increase or decrease by .005% for every
.10% after the first .50% in which Portfolio Class X Share performance on a
rolling annual basis is higher or lower than that of the NAREIT Equity Total
Return Index. In no event will the increase or decrease in any one annual period
exceed .15%. The adjustment shall be computed and paid annually.
The Portfolio Managers
Barbara Rubin and Michael Schatt are responsible for managing the assets of
the Real Estate Portfolio. Ms. Rubin, President of the Adviser, has over 21
years real estate experience and has been associated with Phoenix Home Life for
the past 15 years. Michael Schatt is a Vice President of the Adviser and a
Managing Director of Duff & Phelps Investment Management Co., an affiliate of
the Adviser. He has served as Portfolio Manager for Duff & Phelps Utility Income
Fund since 1994, responsible for managing the real estate investment securities
of the fund. Previously he served as a Director of the Real Estate Advisory
Practice for Coopers & Lybrand, LLC and has over 16 years experience in the real
estate industry.
The Financial Agent and Administrator
Equity Planning serves as financial agent of the Fund and, as such, provides
bookkeeping and pricing services and certain other ministerial functions. As
compensation, Equity Planning is entitled to a fee, payable monthly and based
upon the average of the aggregate daily net asset values of the fund, at the
following incremental annual rates:
First $100 million .05%
$100 million to $300 million .04%
$300 million to $500 million .03%
Greater than $500 million .015%
Such fee is expected to equal approximately the cost to Equity Planning of
provided such services. A minimum charge of $70,000 is applicable. In addition,
Equity Planning is paid $12,000 for each class of shares beyond one.
10
<PAGE>
Duff & Phelps Investment Management Co. ("DPM") serves as administrator for
the Portfolio, and as such, facilitates and provides administrative services for
the Portfolio. DPM is a subsidiary of Phoenix Duff & Phelps Corporation, which
is an indirect less than wholly-owned subsidiary of Phoenix Home Life. As
compensation, under an Administration Agreement, DPM receives a fee, computed
daily and payable monthly, at the annual rate of 0.15% of the average daily net
assets of the Fund.
The Custodian and Transfer Agent
The custodian of the assets of the Real Estate Portfolio is State Street
Bank and Trust Company, P.O. Box 1713, Boston, Massachusetts 02101.
Equity Planning serves as transfer agent for the Fund (the "Transfer Agent")
for which it is paid $14.95 plus certain out-of-pocket expenses for each
designated shareholder account. The Transfer Agent is authorized to engage
sub-agents to perform certain shareholder servicing functions from time to time
for which such agents shall be paid a fee by the Transfer Agent.
Brokerage Commissions
Although the Conduct Rules of the National Association of Securities
Dealers, Inc. prohibit its members from seeking orders for the execution of
investment company portfolio transactions on the basis of their sales of
investment company shares, under such Rules, sales of investment company
shares may be considered in selecting brokers to effect portfolio
transactions. Accordingly, some portfolio transactions are, subject to such
Rules and to obtaining best prices and executions, effected through dealers
(excluding Equity Planning) who sell shares of the Fund.
DISTRIBUTION PLAN
Equity Planning serves as the national distributor of the Fund's shares.
Equity Planning is registered as a broker-dealer in fifty states. The
principal offices of Equity Planning are located at 100 Bright Meadow
Boulevard, P.O. Box 2200, Enfield, Connecticut 06083-2200. Philip R.
McLoughlin is a Trustee and President of the Fund and a director and officer
of Equity Planning. Michael E. Haylon, a director of Equity Planning, is an
officer of the Fund. G. Jeffrey Bohne, Nancy G. Curtiss, William E. Keen,
III, William R. Moyer, William J. Newman, Leonard J. Saltiel, and Thomas N.
Steenburg are officers of the Fund and officers of Equity Planning.
Equity Planning and the Fund have entered into distribution agreements under
which Equity Planning has agreed to use its best efforts to find purchasers
for Fund shares. The Fund has granted Equity Planning the exclusive right to
purchase from the Fund and resell, as principal, shares needed to fill
unconditional orders for Fund shares. Equity Planning may sell Fund shares
through its registered representatives or through securities dealers with
whom it has sales agreements. Equity Planning may also sell Fund shares
pursuant to sales agreements entered into with banks or bank affiliated
securities brokers who, acting as agent for their customers, place orders for
Fund shares with Equity Planning. Although the Glass-Steagall Act prohibits
banks and bank affiliates from engaging in the business of underwriting,
distributing or selling securities (including mutual fund shares), banking
regulators have not indicated that such institutions are prohibited from
purchasing mutual fund shares upon the order and for the account of their
customers. If, because of changes in law or regulations, or because of new
interpretations of existing law, it is determined that agency transactions of
banks or bank affiliated securities brokers are not permitted under the
Glass-Steagall Act, the Trustees will consider what action, if any, is
appropriate. It is not anticipated that termination of sales agreements with
banks or bank affiliated securities brokers would result in a loss to their
customers or a change in the net asset value per share of a portfolio of the
Fund. The sale of Fund shares through a bank or a securities broker
affiliated with a bank is not expected to preclude the Fund from borrowing
from such bank or from availing itself of custodial or transfer agency
services offered by such bank.
The Trustees have adopted a distribution plan on behalf of the Class Y
Shares pursuant to Rule 12b-1 under the 1940 Act. The Class Y Share
distribution plan (the "Plan") has been approved by Phoenix Home Life as
initial, sole shareholder. The Plan authorizes the payment to Equity Planning
of amounts not exceeding 0.25% annually of the average of the daily net
assets of Class Y Shares of each respective portfolio for each year elapsed
after the inception of the Plan. Although under no contractual obligation to
do so, the Fund intends to make such payments to Equity Planning as
commissions for Class Y Shares sold, to enable Equity Planning to (i) pay
maintenance or other fees with respect to Class Y Shares (the "Service Fee"),
and (ii) pay bank affiliated securities brokers maintenance or other fees
relating to Class Y Shares purchased by their customers and remaining on the
Fund's books during the period for which such fee is paid. The portion of the
above fees paid by the Fund to Equity Planning as "Service Fees" shall not
exceed 0.25% annually of Class Y Share average daily net assets. Payments,
less the portion thereof paid by Equity Planning to others, may be used by
Equity Planning for its expenses of distributing Class Y Shares. The Fund is
not required to reimburse Equity Planning if expenses of distributing Class Y
Shares exceed payments and any sales charges paid to Equity Planning. The
Plan requires that at least quarterly the Trustees must review a written
report with respect to the amounts expended under the Plan and the purposes
for which such expenditures were made. While the Plan is in effect, the Fund
will be required to commit the selection and nomination of candidates for
Trustees who are not "interested persons" (as defined in the 1940 Act) to the
discretion of other Trustees who are not interested persons.
HOW TO BUY SHARES
The Fund currently issues two classes of shares for the Real Estate
Portfolio. Both Class X Shares and Class Y Shares are each available to Plans
(as hereafter defined) and institutional investors which initially purchase
shares of the Fund whose net asset value equals or exceeds $250,000. "Plans"
are
11
<PAGE>
defined as corporate, public, union and governmental pension plans. Completed
applications for the purchase of shares should be mailed to State Street Bank
and Trust Company, P.O. Box 8301, Boston, MA 02266-8301.
The minimum subsequent investment for each class is $100. Shares are sold at
the net asset value per share (as described below) next computed after a
completed application or purchase order is received by State Street Bank and
Trust Company together with good and sufficient funds therefor (certified
checks, federal funds wires, and automated clearing house transactions
("ACH")). Completed orders received on a business day prior to 4:00 p.m.
E.S.T. will be processed based on that day's closing net asset value. Sales
of shares may be made through broker-dealers, pension consultants or other
qualified financial agents/institutions.
The minimum initial investment amounts for the purchase of either class of
Fund shares shall be waived with respect to purchases by: (i) trust
companies, bank trust departments, broker-dealers financial planners and
investment advisers for funds over which such entity charges an account
management fee and which are held in a fiduciary, agency, advisory, custodial
or similar capacity; or (ii) Plans and institutional investors where the
amounts invested represent the redemption proceeds from the reorganization or
merger of other investment companies.
No trail fees are payable to broker-dealers or others in connection with the
purchase, sale or retention of Class X Shares.
If part of any investment is subsequently redeemed within one year of the
investment date, the broker/dealer or exempt financial institution will
refund to Equity Planning any such amounts paid with respect to the
investment. Equity Planning will sponsor sales contests, training and
educational meetings and provide to all qualifying agents, from its own
profits and resources, additional compensation in the form of trips,
merchandise or expense reimbursement. Broker-dealers or exempt financial
institutions other than Equity Planning may also levy customary additional
charges to shareholders for their services in effecting transactions, if they
notify the Fund of their intention to do so.
Equity Planning intends to pay broker-dealers and exempt financial
institutions with whom it has a sales agreement a service fee of 0.25% of the
average daily net asset value of Class Y Shares sold by such broker-dealers
and exempt financial institutions, subject to future amendment or
termination. Equity Planning will retain all or a portion of the continuing
distribution fee assessed to Class Y shareholders to finance commissions and
related marketing expenses.
Exchange Privileges
Shareholders of the Real Estate Portfolio may not exchange Class X or Class
Y Shares for shares of the same class of other portfolios of the Fund or any
other Phoenix mutual fund. Shareholders are urged to review their constituent
documents and relevant requirements in order to verify pertinent limitations
imposed by retirement plan or group annuity contract exchange limits as well
as restrictions imposed by governing law.
NET ASSET VALUE
The net asset value of the shares of the Real Estate Portfolio is determined
once daily as of the close of trading of the New York Exchange (the
"Exchange") on days when the Exchange is open for trading. Net asset value
per share of the Real Estate Portfolio is determined by adding the values of
all securities and other assets of the Portfolio, subtracting liabilities and
expenses, and dividing by the total number of outstanding shares of the
Portfolio. Assets and liabilities are determined in accordance with generally
accepted accounting principles and applicable rules and regulations of the
Securities and Exchange Commission. The total liability allocated to a class,
plus that class's distribution fee and any other expenses allocated solely to
that class, are deducted from the proportionate interest of such class in the
assets of the Portfolio, and the resulting amount of each is divided by the
number of shares of that class outstanding to produce the net asset value per
share.
In determining the value of the assets of the Real Estate Portfolio, the
securities for which market quotations are readily available are valued at
market value. Debt securities (other than short-term obligations) including
those for which market quotations are not readily available are normally
valued on the basis of valuations provided by a pricing service when such
prices are believed to reflect the fair value of such securities. Securities
listed or traded on a national securities exchange are valued at the last
sale price or, if there has been no recent sale, at the last bid price. A
security that is listed or traded on more than one exchange is valued at the
quotation on the exchange determined to be the primary market for such
security by the Trustees or their delegates. Securities traded in the
over-the-counter market are valued at the last bid price. Short-term
obligations maturing in less than sixty-one days are valued at amortized
cost, which the Trustees have determined approximates market. Equity options
are valued at the last sale price unless the bid or asked price is used.
Exchange-traded fixed income options are valued at the last sale price unless
there is no sale price, in which event current prices by market makers are
used. Over-the-counter traded fixed income options are valued based upon
current prices provided by market makers. Financial futures are valued at the
settlement price established each day by the board of trade or exchange on
which they are traded. Illiquid securities are valued at the price determined
in good faith by the Trustees or the Adviser acting at their direction,
considering all relevant factors including but not limited to, prices
disseminated by pricing services (when such prices are believed to reflect
the fair value of such securities) and the value of any comparable securities
for which market quotations are readily available. If an event were to occur
after the value of an investment was so established but before the net asset
value per share was determined, which was likely to materially change the net
asset value, then the instrument would be valued using fair
12
<PAGE>
value considerations by the Trustees or their delegates. If at any time the
Real Estate Portfolio has other investments, such investments shall be valued
at the fair value thereof as determined in good faith by the Trustees,
although the actual calculations may be made by persons acting pursuant to
the direction of the Trustees.
HOW TO REDEEM SHARES
Any holder of shares of the Real Estate Portfolio may require the Fund to
redeem its shares at any time at the net asset value per share next computed
after receipt of a redemption request in proper written form by State Street
Bank and Trust Company, P.O. Box 8301, Boston, MA 02266-8301, ATTN: Phoenix
Duff & Phelps Institutional Mutual Funds. To be in proper form to redeem
shares, (1) the signature(s) of duly authorized representative(s) of the
shareholder must appear in the appropriate place upon the stock power; (2)
the stock power or any related instruction transmittal must specify the name
and account number of the shareholder exactly as registered; (3) reference to
the name of the Real Estate Portfolio; and (4) and all such signatures must
be guaranteed by an eligible guarantor institution as determined in
accordance with the standards and procedures established by the Transfer
Agent. Currently, such procedures generally permit guarantees by banks,
broker-dealers, credit unions, national securities exchanges, registered
securities associations, clearing agencies and savings associations.
Signature(s) must also be guaranteed on any change of address request
submitted in conjunction with any redemption request. Additional
documentation may be required for redemptions by corporations, partnerships
or other organizations, or if redemption is requested by anyone other than
the shareholder(s) of record. Redemption requests will not be honored until
all required documents in proper form have been received.
In addition, the Fund maintains a continuous offer to repurchase its shares,
and shareholders may normally sell their shares through securities dealers,
who may charge customary commissions for their services. The redemption price
in such case will be the price as of the close of the general trading session
of the New York Stock Exchange on that day, provided the order is received by
the dealer prior thereto, and is transmitted to the Distributor prior to the
close of its business. No charge is made by the Fund on redemptions, but
shares tendered through investment dealers may be subject to service charge
by such dealers. Payment for shares redeemed will be made within three days
after receipt of the duly endorsed share certificates (if issued) or written
request; provided, however, that redemption proceeds will not be disbursed
until each check used for purchase of shares has been cleared for payment by
the investor's bank which may take up to 15 days after receipt of the check.
Telephone Redemption Privileges
Unless a shareholder elects in writing not to participate in the Telephone
Redemption Privilege, shareholders may redeem shares valued at up to $100,000
by calling (800) 814-1897.
The Fund and the Transfer Agent will employ reasonable procedures to confirm
that telephone instructions are genuine. Address and bank account information
will be verified, telephone redemption instructions will be recorded on tape,
and all redemptions will be confirmed in writing to the shareholder. If there
has been an address change within the past 60 days, a telephone redemption
will not be authorized. To the extent that procedures reasonably designed to
prevent unauthorized telephone redemptions are not followed, the Fund and/or
the Transfer Agent may be liable for following telephone instructions for
redemption transactions that prove to be fraudulent. Broker/dealers other
than Equity Planning have agreed to bear the risk of any loss resulting from
any unauthorized telephone redemption instruction from the firm or its
registered representatives. However, the shareholder would bear the risk of
loss resulting from instructions entered by an unauthorized person or third
party that the Fund and/or the Transfer Agent reasonably believe to be
genuine. The Telephone Redemption Privilege may be modified or terminated at
any time without prior notice to shareholders. In addition, during times of
drastic economic or market changes, the telephone redemption privilege may be
difficult to exercise and a shareholder should submit a written redemption
request, as described above.
If the amount of the redemption is $500 or more, the proceeds will be wired
to the shareholder's designated U.S. commercial bank account. If the amount
of the redemption is less than $500, the proceeds will be sent by check to
the address of record on the shareholder's account. Telephone redemption
orders received and accepted by the Transfer Agent on any day when the
Transfer Agent is open for business will be entered at the next determined
net asset value. However telephone redemption orders received and accepted by
the Transfer Agent after the close of trading hours on the Exchange will be
executed on the following business day. The proceeds of a telephone
redemption will normally be sent on the first business day following receipt
of the redemption request. However, with respect to the telephone redemption
of shares purchased by check, such requests will only be effected after the
Fund has assured itself that good payment has been collected for the purchase
of shares, which may take up to 15 days.
Systematic Withdrawal Program
The Systematic Withdrawal Program (the "Program") allows shareholders to
periodically redeem a portion of their shares on predetermined monthly,
quarterly, semi-annual or annual dates. In order to participate in the
Program, shareholders must provide written notice to the Transfer Agent
specifying (a) the frequency in which Program redemptions are to occur, (b)
the routing in which proceeds are to be directed into the shareholder's
account, and (c) the priority among classes of shares of the Portfolio in
which redemptions are to occur.
Except as provided below, Program payments will be made on or about the 20th
day of the month during the frequency period selected by the shareholder.
Program payments may also be processed through Automated Clearing House (ACH)
13
<PAGE>
to the shareholder's account on or about the 10th, 15th or 25th day of each
month. Participants may not redeem sums in any period in excess of the
equivalent of 1% of aggregate Fund holdings (at the net asset value on the
date of redemption) during each month. Program redemptions will only be
effected after the Fund has assured itself that good payment has been
received for the purchase of shares which are to be redeemed.
Class X shareholders participating in the Program must at all times own
shares of the Fund worth $100,000 or more in the aggregate as determined by
the then current net asset value per share. Class Y shareholders
participating in the Program must at all times own shares of the Fund worth
$50,000 or more in the aggregate as determined by the then current net asset
value per share. A shareholder's participation in the Program will also
automatically terminate if redemptions are made outside the Program.
Redemption-in-kind
To the extent consistent with state and federal law, the Fund may make
payment of the redemption price either in cash or in kind. The Fund has
elected to pay in cash all requests for redemption by any shareholder of
record, but may limit such cash in respect to each shareholder during any 90
day period to the lesser of $250,000 or 1% of the net asset value of the Fund
at the beginning of such period. This election has been made pursuant to Rule
18f-1 under the 1940 Act and is irrevocable while the Rule is in effect
unless the Securities and Exchange Commission, by order, permits its
withdrawal. In case of a redemption in kind, securities delivered in payment
for shares would be valued at the same value assigned to them in computing
the net asset value per share of the Fund. A shareholder receiving such
securities would incur brokerage costs when it sold the securities.
DIVIDENDS, DISTRIBUTIONS
AND TAXES
The Real Estate Portfolio will be treated as a separate mutual fund for
federal income tax purposes. The Real Estate Portfolio intends to elect to be
taxed as a regulated investment company ("RIC") and qualify as such annually
under Subchapter M of the Code. As a RIC, the Real Estate Portfolio will not
be subject to federal income tax on its ordinary income and net realized
gains distributed to its shareholders. The Real Estate Portfolio intends to
distribute sufficient ordinary income and net realized capital gains, if any,
annually to avoid the imposition of federal income tax or a non-deductible 4%
excise tax.
Many investors, including most tax qualified plan investors, may be eligible
for preferential federal income tax treatment on distributions received from
the Real Estate Portfolio and dispositions of shares of the Real Estate
Portfolio. The Fund has not sought opinions of counsel or applied for a
ruling from the Internal Revenue Service as to whether the assessment of
higher distribution fees with respect to Class Y Shares may result in any
dividends or distributions constituting "preferential dividends" under the
Code. Complete assurances cannot be given when or whether the Fund will
receive a favorable opinion or ruling or, the potential consequences
associated with an adverse determination. This Prospectus does not attempt to
describe in any respect such preferential tax treatment. Any prospective
investor that is a trust or other entity eligible for special tax treatment
under the Code that is considering purchasing shares of the Fund should
consult its tax advisor about the federal, state or local tax consequences
particular to it, as should persons considering whether to have amounts held
for their benefit in such trusts or other entities which intend to invest in
shares of the Fund.
Investors that do not receive preferential tax treatment are subject to
federal income tax on distributions received with respect to their shares of
the Fund. Distributions of the Fund's ordinary income and short-term capital
gains are taxable to shareholders as ordinary income whether received in cash
or shares of the Fund's. Designated long-term capital gains distributions are
taxable as long-term capital gains whether distribution in cash or additional
shares and regardless of how long the shareholder owned the shares of the
Fund; however, a loss recognized on the sale of the shares of the Real Estate
Portfolio held for six months or less will be treated as a long-term capital
loss to the extent of long-term capital gains distributions received on those
shares. Certain designated dividends paid by the Fund may be eligible for the
dividends-received deduction for corporate shareholders. Shareholders should
consult with their tax advisor for additional information concerning the
federal, state, local and foreign tax consequences of purchasing shares of
the Real Estate Portfolio.
Dividends from net investment income for the Real Estate Portfolio will be
accrued and paid quarterly. Dividends from net realized capital gains, if
any, will be declared and paid annually for the Real Estate Portfolio.
Dividends and distributions with respect to the shares of any class of the
Real Estate Portfolio will be payable in full and fractional shares of such
class of the Portfolio at the net asset value on the first business day after
the record date, or, at the option of the shareholder, in cash. Any
shareholder who purchases shares of the Real Estate Portfolio prior to the
close of business on the record date for a dividend or distribution will be
entitled to receive such dividend or distribution.
The foregoing is only a summary of some of the important tax considerations
generally affecting the Real Estate Portfolio and its shareholders.
Shareholders should consult competent tax advisers regarding specific tax
situations.
ADDITIONAL INFORMATION
Organization of the Fund
The capitalization of the Fund consists solely of an unlimited number of
shares of beneficial interest. The Fund currently offers shares in seven
different portfolios, each offering two classes. Holders of shares of the
Real Estate Portfolio have equal rights with regard to voting, redemptions,
dividends, distributions, and liquidations with respect to the Real Estate
Portfolio (provided that Class Y Shares of the Real Estate Portfolio bear
higher distribution fees and pay
14
<PAGE>
correspondingly lower dividends per share than Class X Shares). Shareholders
of all portfolios vote on the election of Trustees. On matters affecting the
Real Estate Portfolio (such as approval of an investment advisory agreement
or a change in fundamental investment policies), a separate vote of the Real
Estate Portfolio is required. On matters affecting an individual class (such
as approval of matters relating to the Class Y distribution plan), a separate
vote of that class is required. Shares of each portfolio are fully paid,
nonassessable, redeemable and fully transferable when they are issued. Shares
do not have cumulative voting rights, conversion, preemptive rights or
subscription rights. Shares of the Real Estate Portfolio do not have exchange
rights.
The assets received by the Fund for the issue or sale of shares of each
portfolio and all income, earnings, profits and proceeds thereof, are
allocated to such portfolio (and class if applicable) subject only to the
rights of creditors, and constitute the underlying assets of such portfolio
(and class if applicable). The underlying assets of each portfolio are
required to be segregated on the books of account, and are to be charged with
the expenses in respect to such portfolio and with a share of the general
expenses of the Fund. Any general expenses of the Fund not readily
identifiable as belonging to a particular portfolio or class will be
allocated by or under the direction of the Trustees as they determine fair
and equitable.
Unlike the stockholders of a corporation, there is a possibility that the
shareholders of a Massachusetts business trust such as the Fund may be
personally liable for debts or claims against the Fund. The Declaration of
Trust provides that shareholders shall not be subject to any personal
liability for the acts or obligations of the Fund and that every written
agreement, undertaking or obligation made or issued by the Fund shall contain
a provision to that effect. The Declaration of Trust provides for
indemnification out of the trust property for all losses and expenses of any
shareholder held personally liable for the obligations of the Fund. Thus, the
risk of a shareholder incurring financial loss on account of shareholder
liability, which is considered remote, is limited to circumstances in which
the Fund itself would be unable to meet its obligations.
Additional Inquiries
Inquiries and requests for the Statement of Additional Information, the
Annual Report to Shareholders and the Semi-Annual Report to Shareholders
should be directed to Equity Planning at (800) 814-1897 or 100 Bright Meadow
Boulevard, P.O. Box 2200, Enfield, Connecticut 06083-2200.
15
<PAGE>
Phoenix Duff & Phelps Institutional Mutual Funds [VERSION B]
101 Munson Street, Greenfield, Massachusetts 01301
(800) 814-1897
Statement of Additional Information
April 1, 1997
This Statement of Additional Information is not a prospectus but expands
upon and supplements the information contained in the current prospectus of
the Real Estate Equity Securities Portfolio of the Phoenix Duff & Phelps
Institutional Mutual Funds (the "Fund"), dated April 1, 1997 and should be
read in conjunction with it. A copy may be obtained by calling Phoenix Equity
Planning Corporation ("Equity Planning") at (800) 814-1897, or by writing to
Equity Planning at 100 Bright Meadow Boulevard, P.O. Box 2200, Enfield,
Connecticut 06083-2200.
TABLE OF CONTENTS*
PAGE
THE FUND 2
INVESTMENT OBJECTIVES AND POLICIES (6) 2
INVESTMENT RESTRICTIONS (8) 5
PERFORMANCE INFORMATION (8) 6
PORTFOLIO TURNOVER 7
SERVICES OF THE ADVISER 7
SERVICES OF THE ADMINISTRATOR 7
BROKERAGE ALLOCATION 8
DETERMINATION OF NET ASSET VALUE (10) 8
PURCHASE OF SHARES (9) 8
TAXES (12) 9
THE DISTRIBUTOR 10
DISTRIBUTION PLAN (11) 10
TRUSTEES AND OFFICERS (10 ) 10
ADDITIONAL INFORMATION (12) 17
*Numbers in parenthesis are cross-references to related pages of the
Prospectus.
<PAGE>
THE FUND
Phoenix Duff & Phelps Institutional Mutual Funds (the "Fund") is an open-end
management investment company which was organized under Massachusetts law on
December 4, 1995 as a business trust.
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives and policies of the Phoenix Real Estate Portfolio
(the "Real Estate Portfolio" or "Portfolio") are described in the "Investment
Objectives and Policies" and "Investment Techniques and Related Risks"
sections of the Prospectus.
The investment objective of the Real Estate Portfolio is deemed to be a
fundamental policy and may not be changed without the approval of the
shareholders of the Portfolio. Investment restrictions described in this
Statement of Additional Information are fundamental policies and may not be
changed without the approval of the Portfolio's shareholders.
The following discussion supplements the description of the Portfolio's
investment policies and investment techniques information contained in the
Prospectus.
Money Market Instruments.
Certificates of Deposit. Certificates of deposit are generally short-term,
interest-bearing negotiable certificates issued by banks or savings and loan
associations against funds deposited in the issuing institution.
Time Deposits. Time deposits are deposits in a bank or other financial
institution for a specified period of time at a fixed interest rate for which
a negotiable certificate is not received.
Banker's Acceptances. A bankers' acceptance is a time draft drawn on a
commercial bank by a borrower usually in connection with an international
commercial transaction (to finance the import, export, transfer or storage of
goods). The borrower, as well as the bank, is liable for payment, and the
bank unconditionally guarantees to pay the draft at its face amount on the
maturity date. Most acceptances have maturities of six months or less and are
traded in secondary markets prior to maturity.
Commercial Paper. Commercial paper refers to short-term, unsecured
promissory notes issued by corporations to finance short-term credit needs.
Commercial paper is usually sold on a discount basis and has a maturity at
the time of issuance not exceeding nine months.
Corporate Debt Securities. Corporate debt securities with a remaining
maturity of less than one year tend to become extremely liquid and are traded
as money market securities.
U.S. Government Obligations. Securities issued or guaranteed as to principal
and interest by the United States Government include a variety of Treasury
securities, which differ only in their interest rates, maturities, and times
of issuance. Treasury bills have maturities of one year or less. Treasury
notes have maturities of one to ten years, and Treasury bonds generally have
maturities of greater than ten years. Agencies of the United States
Government which issue or guarantee obligations include, among others,
Export-Import Banks of the United States, Farmers Home Administration,
Federal Housing Administration, Government National Mortgage Association,
Maritime Administration, Small Business Administration and The Tennessee
Valley Authority. Obligations of instrumentalities of the United States
Government include securities issued or guaranteed by, among others, the
Federal National Mortgage Association, Federal Home Loan Banks, Federal Home
Loan Mortgage Corporation, Federal Intermediate Credit Banks, Banks for
Cooperatives, and the U.S. Postal Service. Some of these securities are
supported by the full faith and credit of the U.S. Government; others are
supported by the right of the issuer to borrow from the Treasury, while still
others are supported only by the credit of the instrumentality.
Repurchase Agreements. The repurchase price under the repurchase agreements
described in the Prospectus generally equals the price paid by the Fund plus
interest negotiated on the basis of current short-term rates (which may be
more or less than the rate on the securities underlying the repurchase
agreement). Securities subject to repurchase agreements are held by the
Fund's custodian (or sub-custodian) or in the Federal Reserve/Treasury
book-entry system. Repurchase agreements are considered to be loans under the
Investment Company Act of 1940, as amended (the "1940 Act").
Bank Obligations. For purposes of the Portfolio's investment policies with
respect to bank obligations, the assets of a bank or savings institution will
be deemed to include the assets of its domestic and foreign branches.
When-Issued and Delayed Delivery Transactions. When the Portfolio agrees to
purchase securities on a when-issued or delayed delivery basis, its custodian
will set aside any asset, including equity securities and any non-investment
grade debt so long as the asset is liquid, unencumbered and marked to market
daily equal to the amount of the purchase or the commitment in a pledged
account. Normally, the custodian will set aside portfolio securities to meet
this requirement. The market value of the pledged account will be monitored
and if such market value declines, the Portfolio will be required
subsequently to place additional assets in the pledged account in order to
ensure that the value of the account remains equal to the amount of the
Portfolio's commitments. Because the Portfolio will set aside cash or other
liquid assets in the manner described, the Portfolio's liquidity and ability
to manage its portfolio might be affected in the event its when-issued
purchases or delayed delivery
2
<PAGE>
commitments ever exceeded 25% of the value of its assets. In the case of a
delayed delivery of the sale of portfolio securities, the Portfolio's
custodian will hold the portfolio securities themselves in a segregated
account while the commitment is outstanding.
The Portfolio will make commitments to purchase securities on a when-issued
basis or delayed delivery basis only with the intention of completing the
transaction and actually purchasing or selling the securities. If deemed
advisable as a matter of investment strategy, however, the Portfolio may
dispose of or renegotiate a commitment after it is entered into, and may sell
securities it has committed to purchase before those securities are delivered
to the Portfolio on the settlement date. In these cases the Portfolio may
realize a capital gain or loss. When the Portfolio engages in when-issued and
delayed delivery transactions, it relies on the other party to consummate the
trade. Failure of such party to do so may result in the Portfolio's incurring
a loss or missing an opportunity to obtain a price considered to be
advantageous.
The value of the securities underlying a when-issued purchase or a delayed
delivery to purchase securities, and any subsequent fluctuations in their
value, is taken into account when determining the Portfolio's net asset value
starting on the day the Portfolio agrees to purchase the securities. The
Portfolio does not earn interest on the securities it has committed to
purchase until they are paid for and delivered on the settlement date. When
the Portfolio makes a delayed delivery of the sale of securities it owns, the
proceeds to be received upon settlement are included in the Portfolio's
assets, and fluctuations in the value of the underlying securities are not
reflected in the Portfolio's net asset value as long as the commitment
remains in effect.
Financial Futures and Related Options. The Portfolio may use financial
futures contracts and related options to hedge against changes in the market
value of its portfolio securities or securities which it intends to purchase.
Hedging is accomplished when an investor takes a position in the futures
market opposite to his cash market position. There are two types of
hedges--long (or buying) and short (or selling) hedges. Historically, prices
in the futures market have tended to move in concert with cash market prices,
and prices in the futures market have maintained a fairly predictable
relationship to prices in the cash market. Thus, a decline in the market
value of securities in the Portfolio's holdings may be protected against to a
considerable extent by gains realized on futures contracts sales. Similarly,
it is possible to protect against an increase in the market price of
securities which the Portfolio may wish to purchase in the future by
purchasing futures contracts.
The Portfolio may purchase or sell any financial futures contracts which are
traded on a recognized exchange or board of trade. Financial futures
contracts consist of interest rate futures contracts and securities index
futures contracts. A public market presently exists in interest rate futures
contracts covering long-term U.S. Treasury bonds, U.S. Treasury notes,
three-month U.S. Treasury bills and GNMA certificates. Securities index
futures contracts are currently traded with respect to the Standard & Poor's
500 Composite Stock Price Index and such other broad-based stock market
indices as the New York Stock Exchange Composite Stock Index and the Value
Line Composite Stock Price Index. A clearing corporation associated with the
exchange or board of trade on which a financial futures contract trades
assumes responsibility for the completion of transactions and also guarantees
that open futures contracts will be performed.
In contrast to the situation when the Portfolio purchases or sells a
security, no security is delivered or received by the Portfolio upon the
purchase or sale of a financial futures contract. Initially, the Portfolio
will be required to deposit in a segregated account with its custodian bank
any asset, including equity securities and any non-investment grade debt so
long as the asset is liquid, unencumbered and marked to market daily. This
amount is known as initial margin and is in the nature of a performance bond
or good faith deposit on the contract. The current initial margin deposit
required per contract is approximately 5% of the contract amount. Brokers may
establish deposit requirements higher than this minimum. Subsequent payments,
called variation margin, will be made to and from the account on a daily
basis as the price of the futures contract fluctuates. This process is known
as marking to market.
The writer of an option on a futures contract is required to deposit margin
pursuant to requirements similar to those applicable to futures contracts.
Upon exercise of an option on a futures contract, the delivery of the futures
position by the writer of the option to the holder of the option will be
accompanied by delivery of the accumulated balance in the writer's margin
account. This amount will be equal to the amount by which the market price of
the futures contract at the time of exercise exceeds, in the case of a call,
or is less than, in the case of a put, the exercise price of the option on
the futures contract.
Although financial futures contracts by their terms call for actual delivery
or acceptance of securities, in most cases the contracts are closed out
before the settlement date without the making or taking of delivery. Closing
out is accomplished by effecting an offsetting transaction. A futures
contract sale is closed out by effecting a futures contract purchase for the
same aggregate amount of securities and the same delivery date. If the sale
price exceeds the offsetting purchase price, the seller immediately would be
paid the difference and would realize a gain. If the offsetting purchase
price exceeds the sale price, the seller immediately would pay the difference
and would realize a loss. Similarly, a futures contract purchase is closed
out by effecting a futures contract sale for the same securities and the same
delivery date. If the offsetting sale price exceeds the purchase price, the
purchaser would realize a gain, whereas if the purchase price exceeds the
offsetting sale price, the purchaser would realize a loss. The Portfolio will
pay commissions on financial futures contracts and related options
transactions. These commissions may be higher than those which would apply to
purchases and sales of securities directly.
Limitations on Futures Contracts and Related Options. The Portfolio may not
engage in transactions in financial futures contracts or related options for
speculative purposes but only as a hedge against anticipated changes in the
market value of its
3
<PAGE>
portfolio securities or securities which it intends to purchase. The
Portfolio may not purchase or sell financial futures contracts or related
options if, immediately thereafter, the sum of the amount of initial margin
deposits on the Portfolio's existing futures and related options positions
and the premiums paid for related options would exceed 2% of the market value
of the Portfolio's total assets after taking into account unrealized profits
and losses on any such contracts. At the time of purchase of a futures
contract or a call option on a futures contract, any asset, including equity
securities and non-investment grade debt so long as the asset is liquid,
unencumbered and marked to market daily equal to the market value of the
futures contract minus the Portfolio's initial margin deposit with respect
thereto will be deposited in a segregated account with the Portfolio's
custodian bank to collateralize fully the position and thereby ensure that it
is not leveraged. The extent to which the Portfolio may enter into financial
futures contracts and related options also may be limited by the requirements
of the Internal Revenue Code for qualification as a regulated investment
company. See "Taxes."
Risks Relating to Futures Contracts and Related Options. Positions in
futures contracts and related options may be closed out only on an exchange
which provides a secondary market for such contracts or options. The
Portfolio will enter into an option or futures position only if there appears
to be a liquid secondary market. However, there can be no assurance that a
liquid secondary market will exist for any particular option or futures
contract at any specific time. Thus, it may not be possible to close out a
futures or related option position. In the case of a futures position, in the
event of adverse price movements the Portfolio would continue to be required
to make daily margin payments. In this situation, if the Portfolio has
insufficient cash to meet daily margin requirements it may have to sell
portfolio securities at a time when it may be disadvantageous to do so. In
addition, the Portfolio may be required to take or make delivery of the
securities underlying the futures contracts it holds. The inability to close
out futures positions also could have an adverse impact on the Portfolio's
ability to hedge its portfolio effectively.
There are several risks in connection with the use of futures contracts as a
hedging device. While hedging can provide protection against an adverse
movement in market prices, it can also preclude a hedger's opportunity to
benefit from a favorable market movement. In addition, investing in futures
contracts and options on futures contracts will cause the Portfolio to incur
additional brokerage commissions and may cause an increase in the Portfolio's
portfolio turnover rate.
The successful use of futures contracts and related options also depends on
the ability of the Adviser to forecast correctly the direction and extent of
market movements within a given time frame. To the extent market prices
remain stable during the period a futures contract or option is held by the
Portfolio or such prices move in a direction opposite to that anticipated,
the Portfolio may realize a loss on the hedging transaction which is not
offset by an increase in the value of its portfolio securities. As a result,
the Portfolio's return for the period may be less than if it had not engaged
in the hedging transaction.
Utilization of futures contracts by the Portfolio involves the risk of
imperfect correlation in movements in the price of futures contracts and
movements in the price of the securities which are being hedged. If the price
of the futures contract moves more or less than the price of the securities
being hedged, the Portfolio will experience a gain or loss which will not be
completely offset by movements in the price of the securities. It is possible
that, where the Portfolio has sold futures contracts to hedge its portfolio
against decline in the market, the market may advance and the value of
securities held in the Portfolio's holdings may decline. If this occurred,
the Portfolio would lose money on the futures contract and would also
experience a decline in value in its portfolio securities. Where futures are
purchased to hedge against a possible increase in the prices of securities
before the Portfolio is able to invest its cash (or cash equivalents) in
securities (or options) in an orderly fashion, it is possible that the market
may decline; if the Portfolio then determines not to invest in securities (or
options) at that time because of concern as to possible further market
decline or for other reasons, the Portfolio will realize a loss on the
futures that would not be offset by a reduction in the price of the
securities purchased.
The market prices of futures contracts may be affected if participants in
the futures market elect to close out their contracts through off-setting
transactions rather than to meet margin deposit requirements. In such case,
distortions in the normal relationship between the cash and futures markets
could result. Price distortions could also result if investors in futures
contracts opt to make or take delivery of the underlying securities rather
than to engage in closing transactions due to the resultant reduction in the
liquidity of the futures market. In addition, due to the fact that, from the
point of view of speculators, the deposit requirements in the futures markets
are less onerous than margin requirements in the cash market, increased
participation by speculators in the futures market could cause temporary
price distortions. Due to the possibility of price distortions in the futures
market and because of the imperfect correlation between movements in the
prices of securities and movements in the prices of futures contracts, a
correct forecast of market trends may still not result in a successful
hedging transaction.
Compared to the purchase or sale of futures contracts, the purchase of put
or call options on futures contracts involves less potential risk for the
Portfolio because the maximum amount at risk is the premium paid for the
options plus transaction costs. However, there may be circumstances when the
purchase of an option on a futures contract would result in a loss to the
Portfolio while the purchase or sale of the futures contract would not have
resulted in a loss, such as when there is no movement in the price of the
underlying securities.
Mortgage-Related Securities. The Portfolio may invest in Mortgage-Related
Securities (as defined in the Prospectus), including those representing an
undivided ownership interest in a pool of mortgages, such as certificates of
the Government National
4
<PAGE>
Mortgage Association ("GNMA") and the Federal Home Loan Mortgage Corporation
("FHLMC"). These certificates are in most cases pass-through instruments,
through which the holder receives a share of all interest and principal
payments from the mortgages underlying the certificate, net of certain fees.
The average life of a Mortgage-Related Security varies with the underlying
mortgage instruments, which have maximum maturities of 40 years. The average
life is likely to be substantially less than the original maturity of the
mortgage pools underlying the securities as the result of prepayments,
mortgage refinancings or foreclosure. Mortgage prepayment rates are affected
by various factors including the level of interest rates, general economic
conditions, the location and age of the mortgage and other social and
demographic conditions. Such prepayments are passed through to the registered
holder with the regular monthly payments of principal and interest and have
the effect of reducing future payments.
Government securities with nominal remaining maturities in excess of 3-1/2
years that have variable or floating interest rates or demand or put features
may nonetheless be deemed to have remaining maturities of 3-1/2 years or less
so as to be permissible investments for the Fund as follows: (a) a government
security with a variable or floating rate of interest will be deemed to have
a maturity equal to the period remaining until the next readjustment of the
interest rate; (b) a government security with a demand or put feature that
entitles the holder to receive the principal amount of the underlying
security at the time of or sometime after the holder gives notice of demand
or exercise of the put will be deemed to have a maturity equal to the period
remaining until the principal amount can be recovered through demand or
exercise of the put; and (c) a government security with both a variable or
floating rate of interest as described in clause (a) and a demand or put
feature as described in clause (b) will be deemed to have a maturity equal to
the shorter of the period remaining until the next readjustment of the
interest rate or the period remaining until the principal amount can be
recovered through demand or exercise of the put.
Securities issued by Government National Mortgage Association ("GNMA") are,
and securities issued by Federal National Mortgage Association ("FNMA")
include, mortgage-backed securities representing part ownership of a pool of
mortgage loans. In the case of GNMA, the mortgages are insured by the Federal
Housing Administration or Farmers' Home Administration or guaranteed by the
Veteran's Administration. In the case of FNMA, the mortgages are not insured
by an agency of the U.S. Government.
The prices of mortgage-backed securities are inversely affected by changes
in interest rates and, therefore, are subject to the risk of market price
fluctuations. Mortgage-backed securities issued by GNMA and FNMA currently
offer yields which are higher than those available on other securities of the
U.S. Government and its agencies and instrumentalities, but may be less
effective than these other securities as a means of "locking in" attractive
long-term interest rates. This is a result of the need to reinvest prepayment
of principal and the possibility of significant unscheduled prepayments
resulting from declines in mortgage interest rates. As a result, these
securities have less potential for capital appreciation during periods of
declining interest rates than other investments of comparable risk of decline
in value during periods of rising rates.
Lending Portfolio Securities. In order to increase its return on
investments, the Portfolio may make loans of the portfolio securities as long
as the market value of the loaned securities does not exceed 25% of the value
of the Portfolio's total assets. Loans of portfolio securities will always be
fully collateralized by cash or U.S. government securities at no less than
102% of the market value of the loaned securities (as marked to market daily)
and made only to borrowers considered to be creditworthy. Lending portfolio
securities involves a risk of delay in the recovery of the loaned securities
and possibly the loss of the collateral if the borrower fails financially.
INVESTMENT RESTRICTIONS
The Portfolio's fundamental policies cannot be changed without the approval
vote of a majority of the outstanding shares of the Portfolio, which is the
lesser of (i) 67% or more of the voting securities of the Portfolio present
at a meeting if the holders of more than 50% of the outstanding voting
securities of the Portfolio are present or represented by proxy or (ii) more
than 50% of the outstanding voting securities of the Portfolio. A proposed
change in fundamental policy or investment objective will be deemed to have
been effectively acted upon if a majority of the outstanding voting
securities of the Portfolio votes for the approval of the proposal as
provided above, notwithstanding (1) that such matter has not been approved by
a majority of the outstanding securities of any other Portfolio affected by
such matter and (2) that such matter has not been approved by a majority of
the outstanding voting securities of the Fund.
The following investment restrictions are fundamental policies of the
Portfolio and may not be changed except as described above. The Portfolio may
not:
(1) issue senior securities, as such term is defined in the Investment
Company Act of 1940, as amended, except as otherwise provided herein;
(2) make short sales of securities or purchase any securities on margin,
except for such short-term credits as are necessary for the clearance of
transactions; provided, however, the deposit or payment of an initial or
maintenance margin in connection with financial futures contracts or related
options transactions is not considered the purchase of a security on margin;
(3) borrow money in excess of 25% of the value of its total assets, or
pledge its assets to an extent greater than 3% of the market or other fair
value of its total assets. Any such borrowings shall be from banks and shall
be undertaken only as a temporary
5
<PAGE>
measure or for extraordinary or emergency purposes. Deposits in escrow in
connection with the writing of covered call options or in connection with
the purchase or sale of financial futures contracts and related options
shall not be deemed to be a pledge or other encumbrance;
(4) engage in the business of underwriting the securities of others;
(5) concentrate its investments in the securities of issuers all of which
conduct their principal business activities in the same industry provided
that this restriction shall not apply to obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities or issuers
principally engaged in the real estate industry as defined by the Adviser
from time to time;
(6) make any direct investment in real estate, real estate mortgage loans
and/or commodities, except that the Fund may (a) purchase or sell readily
marketable securities which are secured by interests in real estate, or
issued by companies which deal in real estate including real estate
investment and mortgage investment trusts, and (b) engage in financial
futures contracts and related options transactions, provided that the sum of
the initial margin deposits on the Fund's futures and related options
positions and the premiums paid for related options do not exceed 5% of the
Fund's total assets; and
(7) make loans, except that the Fund may (a) invest up to 15% of its total
assets in repurchase agreements of a type regarded as "liquid" which are
fully collateralized as to principal and interest and which are entered into
only with commercial banks, brokers and dealers considered by the Fund to be
creditworthy and (b) loan its portfolio securities in amounts up to
one-third of the market or other fair value of its total assets.
If a percentage restriction on investment or utilization of assets as set
forth is adhered to at the time an investment is made, a later change in the
percentage resulting from a change in the values or costs of the Fund's
assets will not be considered violate of the restriction.
PERFORMANCE INFORMATION
Performance information for the Portfolio may appear in advertisements,
sales literature, or reports to shareholders or prospective shareholders.
Performance information in advertisements and sales literature may be
expressed as yield and as total return.
Quotations of yield for the Portfolio will be based on all investment income
per share earned during a particular 30-day period (including dividends and
interest), less expenses (including pro rata Fund expenses and expenses
applicable to each particular Portfolio) accrued during the period ("net
investment income"), and are computed by dividing net investment income by
the value of a share of the Portfolio on the last day of the period,
according to the following formula:
YIELD = 2[((a-b)) + 1)6 - 1]
-------
cd
where,
a = dividends and interest earned during the period by the Portfolio
b = expenses accrued for the period (net of any reimbursements),
c = the average daily number of shares outstanding during the period that
were entitled to receive dividends, and
d = the maximum offering price per share on the last day of the period.
As summarized in the Prospectus under the heading "Performance Information",
total return is a measure of the change in value of an investment in the
Portfolio over the period covered. The formula for total return used herein
includes four steps: (1) adding to the total number of shares purchased by a
hypothetical $1,000 investment in the Portfolio; (2) calculating the value of
the hypothetical initial investment of $1,000 as of the end of the period by
multiplying the total number of shares of the Portfolio owned at the end of
the period by the net asset value on the last trading day of the period; (3)
assuming maximum sales charge deducted and reinvestment of all dividends at
net asset value and (4) dividing this account value for the hypothetical
investor by the initial $1,000 investment. Total return will be calculated
for one year, five years and ten years or the time period during which the
registration statement including the Portfolio was in effect if the Portfolio
has not been in existence for at least ten years.
Except as above stated, standardized quotations of average annual total
return for each class of shares of the Portfolio will be expressed in terms
of the average annual compounded rate of return of a hypothetical investment
in either Class X or Class Y Shares of the Portfolio over a period of 1, 5,
and 10 years (or up to the life of the class of shares). Standardized total
return quotations reflect the deduction of a proportional share of each
Class's expenses of the Portfolio (on an annual basis), and assume that all
dividends and distributions are reinvested when paid. It is expected that the
performance of Class X Shares shall be better than that of Class Y Shares as
a result of lower distribution fees and certain incrementally lower expenses
paid by Class X Shares. The Fund may also quote supplementally a rate of
total return over different periods of time by means of aggregate, average,
and year-by-year or other types of total return figures.
Performance information for the Portfolio (and each Class thereof) reflects
only the performance of a hypothetical investment in a Class X or Class Y of
the Portfolio during the particular time period in which the calculations are
based. Performance information is not an indication of future performance.
Performance information should be considered in light of the Portfolio's
investment objectives and policies, characteristics and qualities of the
Portfolio, and the market conditions during the given time period, and should
not be considered as a representation of what may be achieved in the future.
6
<PAGE>
PORTFOLIO TURNOVER
Portfolio turnover is calculated by dividing the lesser of purchases or
sales of portfolio securities during the fiscal year by the monthly average
of the value of the Portfolio's securities (excluding from the computation
all securities, including options, with maturities at the time of acquisition
of one year or less). A high rate of portfolio turnover generally involves
correspondingly greater brokerage commission expenses, which must be borne
directly by the Portfolio. Turnover rates may vary greatly from year to year
as well as within a particular year and may also be affected by cash
requirements for redemptions of the Portfolio's shares and by requirements
which enable the Fund to receive certain favorable tax treatment.
SERVICES OF THE ADVISER
The offices of Phoenix Realty Securities ("PRS") are located at 38 Prospect
Street, Hartford, Connecticut 06115. PRS was formed in 1994 as an indirect
subsidiary of Phoenix Home Life Mutual Insurance Company ("Phoenix Home
Life") of Hartford, Connecticut. Phoenix Home Life is a mutual insurance
company engaged in the insurance and investment businesses. Phoenix Home
Life's principal place of business is located at One American Row, Hartford,
Connecticut.
The Adviser continuously furnishes an investment program for the Portfolio
and manages the investment and reinvestment of the assets of the Portfolio,
subject at all times to the supervision of the Trustees. The Adviser, at its
expense, furnishes certain other services, including the services of any
member of its staff who serves as an officer of the Fund.
The investment advisory agreement provides that all costs and expenses
(other than those specifically referred to as being borne by the Adviser)
incurred in the operation of the Fund are borne by the Fund. Each portfolio
pays expenses incurred in its own operation and also pays a portion of the
Fund's general administration expenses allocated on the basis of the asset
size of the respective portfolio, except where an allocation using an
alternative method can be more fairly made. Such expenses include, but shall
not be limited to, all expenses incurred in the operation of the Fund and any
public offering of its shares, including, among others, interest, taxes,
brokerage fees and commissions, fees of Trustees who are not employees of the
Adviser or any of its affiliates, expenses of Trustees' and shareholders'
meetings, including the cost of printing and mailing proxies, a portion of
the expenses of insurance premiums for fidelity and other coverage, expenses
of repurchase and redemption of shares, expenses of issue and sale of shares
(to the extent not borne by Equity Planning under its agreement with the
Fund), association membership dues, charges of custodians, transfer agents,
dividend disbursing agents and financial agents, bookkeeping, auditing, and
legal expenses. The Fund will also pay the fees and bear the expense of
registering and maintaining the registration of the Fund and its shares with
the Securities and Exchange Commission and or qualifying its shares under
state or other securities laws and the expense of preparing and mailing
prospectuses and reports to shareholders.
The investment advisory agreement provides that the Adviser shall not be
liable to the Fund or to any shareholder of the Fund for any error of
judgment or mistake of law or for any loss suffered by the Fund or by any
shareholder of the Fund in connection with the matters to which the
investment advisory agreement relates, except a loss resulting from willful
misfeasance, bad faith, gross negligence or reckless disregard on the part of
the Advisers in the performance of its duties thereunder.
As full compensation for the services and facilities furnished to the Fund,
the Adviser is entitled to a fee. The basic monthly advisory fee payable to the
Adviser is subject to a performance adjustment based upon the Portfolio's Class
X Share annual performance as compared to certain prescribed benchmarks. The
basic monthly fee will therefore increase or decrease by .005% for every .10%
after the first .50% in which Portfolio Class X Share performance on a
rolling annual basis is higher or lower than that of the NAREIT Equity Total
Return Index. In no event will the increase or decrease in any one annual period
exceed .15%. The following chart describes the total fees which would be
applicable.
<TABLE>
<CAPTION>
Rolling One Year
Portfolio Performance Performance
vs. NAREIT Index Base Rate Adjustment Total Fee
- ---------------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Target Rate (less than) Portfolio (less than) Target Rate .45% -- .45%
- -.50% Return +.50%
Target Rate Portfolio Return .45% +.005% .455%
+.60%
Target Rate Portfolio Return .45% +.010% .46%
+.70%
- ---
Target Rate Portfolio Return .45% + .15% .60%
+.300%
Target Rate Portfolio Return .45% -.005% .445%
-.60%
Target Rate Portfolio Return .45% -.010% .44%
-.70%
- ---
Target Rate Portfolio Return .45% -.15% .30%
-.300%
</TABLE>
The advisory agreement will continue in force from year to year, provided
that the agreement must be approved at least annually by the Trustees or by
vote of a majority of the outstanding voting securities of the Portfolio. In
addition, and in either event, the terms of the agreement and any renewal
thereof must be approved by the vote of a majority of the Trustees who are
not parties to the agreement or interested persons (as that term is defined
in the Investment Company Act of 1940) of any such party, cast in person at a
meeting called for the purpose of voting on such approval. The agreement will
terminate automatically if assigned and may be terminated at any time,
without payment of any penalty, either by the Fund or by the Adviser, on
sixty (60) days written notice.
SERVICES OF THE ADMINISTRATOR
Duff & Phelp Investment Management Co. (the "Administrator") serves as
administrator for the Real Estate Portfolio. Under the terms of the
Administration Agreement, the Administrator will assist in maintaining office
facilities, furnish clerical services, office supplies and stationery,
provide advice and assistance on the general operations of the Portfolio,
monitor and make recommendations concerning fidelity bond coverage, monitor
compliance with the policies and limitations of the Portfolio as set forth in
the Fund's governing documents, and prepare and/or coordinate all materials
for the Board of Trustees' meetings. As compensation, the Administrator
receives a fee, computed daily and payable monthly, at the annual rate of
0.15% of the average daily net assets of the Portfolio.
7
<PAGE>
The Agreement continues in effect from year to year provided such
continuance is specifically approved at least annually by the Fund's Board of
Trustees including a majority of the trustees who are not interested persons
or by a vote of a majority of the outstanding voting securities of the
Portfolio. The Agreement automatically terminates upon its assignment and may
be terminated by either party at any time upon not less than 60 days' written
notice.
BROKERAGE ALLOCATION
In effecting portfolio transactions for the Fund, the Adviser adheres to the
Fund's policy of seeking best execution and price, determined as described
below, except to the extent it is permitted to pay higher brokerage
commissions for "brokerage and research services" as defined herein. The
Adviser may cause the Fund to pay a broker an amount of commission for
effecting a securities transaction in excess of the amount of commission
which another broker or dealer would have charged for effecting the
transaction if the Adviser determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or that any offset of direct
expenses of the Portfolio yields the best net price. As provided in Section
28(e) of the Securities Exchange Act of 1934, "brokerage and research
services" include giving advice as to the value of securities, the
advisability of investing in, purchasing or selling securities, and the
availability of securities; furnishing analyses and reports concerning
issuers, industries, economic factors and trends, portfolio strategy and the
performance of accounts; and effecting securities transactions and performing
functions incidental thereto (such as clearance and settlement). Brokerage
and research services provided by brokers to the Fund or to the Adviser are
considered to be in addition to and not in lieu of services required to be
performed by the Adviser under its contract with the Fund and may benefit
both the Fund and other clients of the Adviser. Conversely, brokerage and
research services provided by brokers to other clients of the Adviser may
benefit the Fund.
If the securities in which the Portfolio invests are traded primarily in the
over-the-counter market, where possible the Portfolio will deal directly with
the dealers who make a market in the securities involved unless better prices
and execution are available elsewhere. Such dealers usually act as principals
for their own account. On occasion, securities may be purchased directly from
the issuer. Bonds and money market instruments are generally traded on a net
basis and do not normally involve either brokerage commission or transfer
taxes.
The determination of what may constitute best execution and price in the
execution of a securities transaction by a broker involves a number of
considerations including, without limitation, the overall direct net economic
result to the Fund (involving both price paid or received and any net
commissions and other costs paid), the efficiency with which the transaction
is effected, the ability to effect the transaction at all where a large block
is involved, the availability of the broker to stand ready to execute
possibly difficult transactions in the future and the financial strength and
stability of the broker. Such considerations are judgmental and are weighed
by the Adviser in determining the overall reasonableness of brokerage
commissions paid by the Fund. Some portfolio transactions are, subject to the
Conduct Rules of the National Association of Securities Dealers, Inc. and
subject to obtaining best prices and executions, effected through dealers
(excluding Equity Planning) who sell shares of the Fund.
The Fund has adopted a policy and procedures governing the execution of
aggregated advisory client orders ("bunching procedures") in an attempt to
lower commission costs on a per-share and per-dollar basis. According to the
bunching procedures, the Advisor shall aggregate transactions unless it
believes in its sole discretion that such aggregation is consistent with its
duty to seek best execution (which shall includes the duty to seek best
price) for the Fund. No advisory account of the Advisor is to be favored over
any other account and each account that participates in an aggregated order
is expected to participate at the average share price for all transactions of
the Advisor in that security on a given business day, with all transaction
costs share pro rata based on the Fund's participation in the transaction. If
the aggregated order is filled in its entirety, it shall be allocated among
the Adviser's accounts in accordance with the allocation order, and if the
order is partially filled, it shall be allocated pro rata based on the
allocation order. Notwithstanding the foregoing, the order may be allocated
on a basis different from that specified in the allocation order if all
accounts of the Adviser whose orders are allocated receive fair and equitable
treatment and the reason for such different allocation is explained in
writing and is approved in writing by the Adviser's compliance officer as
soon as practicable after the opening of the markets on the trading day
following the day on which the order is executed. If an aggregated order is
partially filled and allocated on a basis different from that specified in
the allocation order, no account that is benefited by such different
allocation may intentionally and knowingly effect any purchase or sale for a
reasonable period following the execution of the aggregated order that would
result in it receiving or selling more shares than the amount of shares it
would have received or sold had the aggregated order been completely filled.
The Trustees will annually review these procedures or as frequently as shall
appear appropriate.
DETERMINATION OF NET ASSET VALUE
The net asset value of shares of the Fund is determined once daily as of the
close of trading on the New York Stock Exchange on each day during which the
Exchange is open for trading. The New York Stock Exchange is scheduled to be
closed for trading on the following days: New Years Day, Washington's Birthday,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. The Board of Directors of the Exchange reserves the right to
change this schedule as conditions warrant.
In determining the value of the assets of the Portfolio, the securities for
which market quotations are readily available are valued at market value,
which is currently determined using the last reported sale price, or, if no
sales are reported--as is the case with
8
<PAGE>
many securities traded over-the-counter--the last reported bid price. Debt
securities (other than short-term obligations, which are valued on the basis
of amortized cost) are normally valued on the basis of valuations provided by
a pricing service when such prices are believed to reflect the fair value of
such securities. Prices provided by the pricing service may be determined
without exclusive reliance on quoted prices and take into account appropriate
factors such as institution-size trading in similar groups of securities,
yield, quality of issue, trading characteristics and other market data. All
other securities and assets are valued at their fair value as determined in
good faith by the Trustees although the actual calculations may be made by
persons acting pursuant to the direction of the Trustees.
PURCHASE OF SHARES
The Prospectus includes information as to the offering price of shares of
the Portfolio and the minimum initial and subsequent investments which may be
made in the Portfolio. Sales of shares are made through registered
representatives of Equity Planning, or through securities dealers with whom
Equity Planning has sales agreements. Sales of shares are also made to
customers of bank affiliated securities brokers with whom Equity Planning has
sales agreements. Customers purchase shares at the applicable net asset
value.
The Portfolio currently declares all income dividends and all capital gain
distributions, if any, payable in shares of the Fund at net asset value or,
at the option of the shareholder, in cash. Unless otherwise specified in
writing, shareholders shall automatically receive both dividends and capital
gain distributions in additional shares. If a shareholder elects to receive
dividends and/or distributions in cash and the check cannot be delivered or
remains uncashed by the shareholder due to an invalid address, then the
dividend and/or distribution will be reinvested after the Transfer Agent has
been informed that the proceeds are undeliverable. Additional shares will be
purchased for the shareholder's account at the then current net asset value.
Reinvestment direction forms and prospectuses are available from Equity
Planning. An alternate payee section has been incorporated into the
application allowing distributions to be mailed to a second payee and/or
address. Dividends and capital gain distributions received in shares are
taxable to the shareholder and credited in full and fractional shares
computed at the closing net asset value on the next business day after the
record date. To be effective with respect to a particular dividend or
distribution, notification of the new distribution option must be received by
the Transfer Agent at least three days prior to the record date of such
dividend or distribution. If all shares in the shareholder's account are
repurchased or redeemed or transferred between the record date and the
payment date of a dividend or distribution, he will receive cash for the
dividend or distribution regardless of the distribution option selected.
TAXES
As stated in the Prospectus, the Portfolio is treated as a separate entity
for federal income tax purposes. The Portfolio intends to elect to be treated
as a regulated investment company ("RIC") and qualify as such under
Subchapter M of the Internal Revenue Code (the "Code").
The Code sets forth numerous criteria which must be satisfied in order for
the Portfolio to qualify as a RIC. The Portfolio must, among other things,
meet the following tests for each taxable year: (1) at least 90% of the
Portfolio's gross income must be derived from a) dividends, b) interest, c)
payments with respect to securities loans, d) gains from the sale or other
disposition of stocks or securities or foreign currencies, or e) other income
(including but not limited to gains from options, futures, or forward
contracts) derived by the Portfolio with respect to its business of investing
in stocks, securities or currencies; (2) less than 30% of the Portfolio's
gross income must be derived from gains realized on the sale or other
disposition of: a) stocks or securities b) options, futures or forward
contracts (other than options, futures, or forward contracts on foreign
currencies) held less than three months; and c) foreign currencies (or
options, futures, or forward contracts) not directly related to the Portfolio
business of investing in stocks or securities; and (3) distribute annually at
least 90% of its investment company taxable income and net exempt-interest
income.
In addition to the gross income tests, to qualify as a RIC, the Portfolio
must also diversify its holdings so that, at the close of each quarter of its
taxable year, (1) at least 50% of the value of its total assets consists of
cash, cash items, U.S. Government securities, and other securities limited
generally with respect to any one issuer to not more than 5% of the total
assets of the Portfolio and not more than 10% of the outstanding voting
securities of such issuer, and (2) not more than 25% of the value of its
total assets is invested in the assets of any one issuer (other than U.S.
Government securities). If in any taxable year a Portfolio does not qualify
as a RIC, all of its net investment income and realized capital gains will be
taxed at corporate rates.
In each taxable year that the Portfolio qualifies as a RIC, it (but not its
shareholders) will be relieved of federal income tax on that portion of its
net investment income and net capital gains that are currently distributed
(or deemed distributed) to its shareholders. It is the policy of the
Portfolio to distribute all of its net investment income and net capital
gains to its shareholders in order to avoid any federal income tax liability.
In addition, the Portfolio intends to make timely distribution sufficient in
amount to avoid a non-deductible 4% excise tax. An excise tax will be imposed
on the Portfolio to the extent that it fails to distribute, with respect to
each calendar year, at least 98% of its net ordinary income for such calendar
year and 98% of its net capital gains as determined for the one year period
ending October 31 of such calendar year. In addition, an amount equal to the
undistributed net ordinary income and net capital gains from the previous
calendar year must also be distributed to avoid the excise tax.
The Fund is required to withhold for income taxes 31% of dividends,
distributions and redemption payments, if any of the following circumstances
exist: i) a shareholder fails to provide the Fund with a correct taxpayer
identification number (TIN); ii)
9
<PAGE>
the Fund is notified by the Internal Revenue Service that the shareholder
furnished an incorrect TIN; or iii) the Fund is notified by the Internal
Revenue Service that withholding is required because the shareholder failed
to report the receipt of dividends or interest from other sources.
Withholding may also be required for accounts with respect to which a
shareholder fails to certify that i) the TIN provided is correct and ii) the
shareholder is not subject to such withholding. However, withholding will not
be required from certain exempt entities nor those shareholders complying
with the procedures as set forth by the Internal Revenue Service. A
shareholder is required to provide the Fund with a correct TIN. The Fund in
turn is required to report correct taxpayer identification numbers when
filing all tax forms with the Internal Revenue Service. Should the IRS levy a
penalty on the Fund for reporting an incorrect TIN and that TIN was provided
by the shareholder, the Fund will pass the penalty onto the shareholder.
Dividends paid by the Portfolio from net investment income and net realized
short-term capital gains to a shareholder who is a nonresident alien
individual, a foreign fund or estate, a foreign corporation or a foreign
partnership (a foreign shareholder) will be subject to United States
withholding tax at a rate of 30% unless a reduced rate of withholding or a
withholding exemption is provided under applicable treaty law. Foreign
shareholders are urged to consult their own tax advisors concerning the
applicability of the United States withholding tax and any foreign taxes.
The discussion of "Dividends, Distributions and Taxes" in the Prospectus, in
conjunction with the foregoing, is a general and abbreviated summary of
applicable provisions of the Code and Treasury regulations now in effect as
currently interpreted by the courts and the Internal Revenue Service. The
Code and regulations, as well as the current interpretations thereof, may be
changed at any time by legislative, judicial, or administrative action.
Shareholders are urged to consult with their tax advisor regarding specific
questions as to federal, state, local or foreign taxes.
THE DISTRIBUTOR
Phoenix Equity Planning Corporation ("Equity Planning" or "Distributor"),
which has undertaken to use its best efforts to find purchasers for shares of
the Fund, serves as the national distributor of the Fund's shares. Shares of
the Portfolio are offered on a continuous basis. Pursuant to distribution
agreements for each class of shares or distribution method, the Distributor
will purchase shares of the Fund for resale to the public, either directly or
through securities dealers or agents, and is obligated to purchase only those
shares for which it has received purchase orders. Equity Planning may also
sell Fund shares pursuant to sales agreements entered into with
bank-affiliated securities brokers who, acting as agent for their customers,
place orders for Fund shares with Equity Planning. Although the
Glass-Steagall Act prohibits banks and bank affiliates from engaging in the
business of underwriting, distributing or selling securities (including
mutual fund shares), banking regulators have not indicated that such
institutions are prohibited from purchasing mutual fund shares upon the order
and for the account of their customers. In addition, state securities laws on
this issue may differ from the interpretations of federal law and banks and
financial institutions may be required to register as dealers pursuant to
state law. If, because of changes in law or regulations, or because of new
interpretations of existing law, it is determined that agency transactions of
bank-affiliated securities brokers are not permitted, the Trustees will
consider what action, if any, is appropriate. It is not anticipated that
termination of sales agreements with bank-affiliated securities brokers would
result in a loss to their customers or a change in the net asset value per
share of the Portfolio.
During fiscal year 1996 of other portfolios of the Fund, purchasers of the
Fund shares paid aggregate sales charges of $, of which the principal
distributor for the Fund received net commission of $ for its services, the
balance being paid to dealers.
Pursuant to a Financial Agent Agreement, Equity Planning provides
bookkeeping and pricing services directly to the Fund. As compensation for
such services, Equity Planning is entitled to a fee, payable monthly and based
upon the average of the aggregate daily net asset values of the fund, at the
following incremental annual rates:
First $100 million .05%
$100 million to $300 million .04%
$300 million to $500 million .03%
Greater than $500 million .015%
Such fee is expected to equal approximately the cost to Equity Planning of
provided such services. A minimum charge of $70,000 is applicable. In addition,
Equity Planning is paid $12,000 for each class of shares beyond one.
In addition, pursuant to an agreement between Equity Planning, the Fund's
Transfer Agent, and State Street Bank and Trust Company, State Street has
been appointed subagent to perform certain shareholder servicing functions
for the Fund. For performing such services State Street receives a monthly
fee from Equity Planning.
DISTRIBUTION PLAN
The Fund has adopted a distribution plan on behalf of its Class Y Shares
pursuant to Rule 12b-1 of the 1940 Act (the "Plan"). The Plan permits the Fund
to reimburse the Distributor for expenses incurred in connection with activities
intended to promote the sale of shares of Class Y Shares of the Fund.
Pursuant to the Plan, the Fund may reimburse the Distributor for actual
expenses of the Distributor up to 25% of the average daily net assets of the
Class Y Shares. Expenditures under the Plan shall consist of: (i) commissions
to sales personnel for selling
10
<PAGE>
Class Y Shares of the Fund; (ii) compensation, sales incentives and payments
to sales, marketing and service personnel; (iii) payments to broker-dealers
and other financial institutions which have entered into selling agreements
with the Distributor for services rendered in connection with the sale and
distribution of Class Y Shares of the Fund; (iv) payment of expenses incurred
in sales and promotional activities, including advertising expenditures
related to the Fund; (v) the costs of preparing and distributing promotional
materials; (vi) the cost of printing the Fund's Prospectus and Statement of
Additional Information for distribution to potential investors; and (vii)
such other similar services that the Trustees of the Fund determines are
reasonably calculated to result in the sale of Class Y Shares of the Fund;
provided, however, a portion of such amount paid to the Distributor, which
portion shall be equal to or less than 0.25% annually of the average daily
net assets of the Fund's Class Y Shares may be paid for reimbursing the costs
of providing services to Class Y shareholders, including assistance in
connection with inquiries related to shareholder accounts (the "Service
Fee").
In order to receive payments under the Plan, participants must meet such
qualifications to be established in the sole discretion of the Distributor,
such as services to the Fund's Class Y shareholders, or services providing
the Fund with more efficient methods of offering shares to coherent groups of
clients, members or prospects of a participant, or services permitting
bulking of purchases or sales, or transmission of such purchases or sales by
computerized tape or other electronic equipment, or other processing.
On a quarterly basis, the Trustees of the Fund review a report on
expenditures under the Plan and the purposes for which expenditures were
made. The Trustees conduct an additional, more extensive review annually in
determining whether the Plan will be continued. By its terms, continuation of
the Plan from year to year is contingent on annual approval by a majority of
the Trustees of the Fund and by a majority of the Trustees who are not
"interested persons" (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the operation of the Plans or any related
agreements (the "Plan Trustees"). The Plan provides that it may not be
amended to increase materially the costs which the Fund may bear pursuant to
the Plan without approval of the Class Y shareholders of the Fund and that
other material amendments to the Plan must be approved by a majority of the
Plan Trustees by vote cast in person at a meeting called for the purpose of
considering such amendments. The Plan further provides that while it is in
effect, the selection and nomination of Trustees who are not "interested
persons" shall be committed to the discretion of the Trustees who are not
"interested persons." The Plan may be terminated at any time by vote of a
majority of the Plan Trustees or a majority of the outstanding Class Y Shares
of the Fund.
For the Fiscal year ended December 31, 1996 the Fund paid Rule 12b-1 Fees in
the amount of $___ of which Equity Planning received $___ and unaffiliated
broker-dealers received $___. The Rule 12b-1 payments were used for [ ]. No
interested persons of the Fund and no Trustee who is not an interested person of
the Fund, as that term is defined in the Investment Company Act of 1940, had any
direct or indirect financial interest in the operation of the Plan.
TRUSTEES AND OFFICERS
The Trustees and Officers of the Fund and their business affiliations for
the past five years are set forth below and, unless otherwise noted, the
address of each executive officer and Trustee is 56 Prospect Street,
Hartford, Connecticut, 06115-0480.
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- ----------------------------------- -------------- ----------------------------------------------------------
<S> <C> <C>
C. Duane Blinn (69) Trustee Partner in the law firm of Day, Berry & Howard.
Day, Berry & Howard Director/Trustee, Phoenix Funds (1980-present). Trustee,
CityPlace Phoenix-Aberdeen Series Fund (1996-present).
Hartford, CT 06103 Director/Trustee, the National Affiliated Investment
Companies (until 1993).
Robert Chesek (62) Trustee Trustee/Director, Phoenix Funds (1981-present) and
49 Old Post Road Chairman (1989-1994). Trustee, Phoenix-Aberdeen Series
Wethersfield, CT 06109 Fund (1996-present). Director/Trustee, the National
Affiliated Investment Companies (until 1993). Vice
President, Common Stock, Phoenix Home Life Mutual
Insurance Company (1980-1994).
11
<PAGE>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- ----------------------------------- -------------- ----------------------------------------------------------
E. Virgil Conway (67) Trustee Chairman, Metropolitan Transportation Authority
9 Rittenhouse Road (1992-present). Trustee/Director, Consolidated Edison
Bronxville, NY 10708 Company of New York, Inc. (1970-present), Pace University
(1978-present), Atlantic Mutual Insurance Company
(1974-present), HRE Properties (1989-present), Greater New
York Councils, Boy Scouts of America (1985-present), Union
Pacific Corp. (1978-present), Blackrock Fund for Freddie
Mac Mortgage Securities (Advisory Director)
(1990-present), Centennial Insurance Company
(1974-present), Josiah Macy, Jr., Foundation
(1975-present) and The Harlem Youth Development Foundation
(1987-present). Chairman, Audit Committee of the City of
New York (1981-1996). Director/Trustee, the National
Affiliated Investment Companies (until 1993).
Director/Trustee, Phoenix Funds (1993-present). Trustee,
Phoenix-Aberdeen Series Fund (1996-present). Director,
Duff & Phelps Utilities Tax-Free Income Inc. and Duff &
Phelps Utility and Corporate Bond Trust Inc.
(1995-present). Director, Accuhealth (1994-present),
Trism, Inc. (1994-present), Realty Foundation of New York
(1972-present), Chairman, New York Housing Partnership
Development Corp. (1981-present), and Blackrock Fannie Mae
Mortgage Securities Fund (Advisory Director) (1989-1996)
and Advisory Director, Fund Directions (1993-present).
Chairman, Financial Accounting Standards Advisory Council
(1992-1995).
William W. Crawford (68) Trustee Representative (1994-1995), Senior Executive (1994-1995),
3003 Gulf Shore Blvd. North President and Chief Operating Officer (1988-1993),
No. 901 Hilliard, Lyons, Inc. (broker/dealer). Director, Duff &
Naples, FL 34103-3913 Phelps Utilities Tax-Free Income Inc. (1995-present), Duff
& Phelps Utility and Corporate Bond Trust Inc.
(1995-present).
Harry Dalzell-Payne (67) Trustee Director/Trustee, Phoenix Funds (1983-present). Director,
330 East 39th Street Duff & Phelps Utilities Tax-Free Income Inc.
Apartment 29G (1995-present), Duff & Phelps Utility and Corporate Bond
New York, NY 10016 Trust Inc. (1995-present). Trustee, Phoenix-Aberdeen
Series Fund (1996-present). Director, Farragut Mortgage
Co., Inc. (1991-1994). Director/Trustee, the National
Affiliated Investment Companies (1983-1993). Formerly a
Major General of the British Army.
William N. Georgeson (69) Trustee Director, Duff & Phelps Utility and Corporate Bond Trust
575 Glenwood Road Inc. (1994-present) and Duff & Phelps Utilities Tax-Free
Lake Forest, IL 60045 Income Inc. (1993-present).
*Francis E. Jeffries (66) Trustee Director and Chairman of the Board, Phoenix Duff & Phelps
6585 Nicholas Blvd. Corporation (1995-present). Director/Trustee, Phoenix
Apt. 1601 Funds (1995-present). Trustee, Phoenix-Aberdeen Series
Naples, FL 33963 Fund (1996-present). Director, Duff & Phelps Utilities
Income Fund (1987-present), Duff & Phelps Utilities
Tax-Free Income Inc. (1991-present), Duff & Phelps Utility
and Corporate Bond Trust Inc. (1993-present) and The
Empire District Electric Company (1984-present). Director
(1989-1995), Chairman of the Board (1993-1995), President
(1989-1993), and Chief Executive Officer (1989-1995), Duff
& Phelps Corporation.
12
<PAGE>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- ----------------------------------- -------------- ----------------------------------------------------------
Leroy Keith, Jr. (57) Trustee Chairman and Chief Executive Officer, Carson Products
Chairman and Chief Executive Company (1995-present). Director/Trustee, Phoenix Funds
Officer (1980-present). Trustee, Phoenix-Aberdeen Series Fund
Carson Product Company (1996-present). Director, Equifax Corp. (1991-present) and
64 Ross Road Keystone International Fund, Inc. (1989-present). Trustee,
Savannah, GA 30750 Keystone Liquid Trust, Keystone Tax Exempt Trust, Keystone
Tax Free Fund, Master Reserves Tax Free Trust, and Master
Reserves Trust. Director/Trustee, the National Affiliated
Investment Companies (until 1993). Director, Blue
Cross/Blue Shield (1989-1993) and First Union Bank of
Georgia (1989-1993). President, Morehouse College
(1987-1994). Chairman and Chief Executive Officer, Keith
Ventures (1992-1994).
*Philip R. McLoughlin (50) Trustee and Director, Vice Chairman and Chief Executive Officer,
One American Row President Phoenix Duff & Phelps Corporation (1995-present). Director
Hartford, CT 06102 (1994-present) and Executive Vice President, Investments,
(1988-present) Phoenix Home Life Mutual Insurance Company.
Director/Trustee and President, Phoenix Funds
(1989-present). Trustee, Phoenix-Aberdeen Series Fund
(1996-present), Duff & Phelps Utilities Tax-Free Income
Inc. (1995-present) and Duff & Phelps Utility and
Corporate Bond Trust Inc. (1995-present). Director,
(1983-present) and Chairman (1995-present) Phoenix
Investment Counsel, Inc. Director (1984-present) and
President (1990-present), Phoenix Equity Planning
Corporation. Director, Phoenix Realty Group, Inc.
(1994-present), Phoenix Realty Advisors, Inc.
(1987-present), Phoenix Realty Investors, Inc. (1994-
present), Phoenix Realty Securities, Inc. (1994-present),
PXRE Corporation (Delaware) (1985-present), and World
Trust Fund (1991-present). Director and Executive Vice
President, Phoenix Life and Annuity Company
(1996-present), Director and Executive Vice President, PHL
Variable Insurance Company (1995-present), and Director,
Phoenix Charter Oak Trust Company (1996-present).
Director/Trustee, the National Affiliated Investment
Companies (until 1993). Director (1994-present), Chairman
(1996-present) and Chief Executive Officer (1995-1996),
National Securities & Research Corporation and Director
and President, Phoenix Securities Group, Inc. (1993-1996).
Director (1992-present) and President (1992-1994), W.S.
Griffith & Co., Inc. (1992-1995) and Director
(1992-present) and President (1992-1994), Townsend
Financial Advisers, Inc. Director and Vice President, PM
Holdings, Inc. (1985-present).
Eileen A. Moran (42) Trustee President and Chief Executive Officer, Public Service
Resources Corporation (1990-present).
Everett L. Morris (68) Trustee Vice President, W.H. Reaves and Company (1993-present).
164 Laird Road Director/ Trustee, Phoenix Funds (1995-present). Trustee,
Colts Neck, NJ 07722 Duff & Phelps Mutual Funds (1994-present). Trustee,
Phoenix-Aberdeen Series Fund (1996-present). Director,
Duff & Phelps Utilities Tax-Free Income Inc.
(1991-present), Duff & Phelps Utility and Corporate Bond
Trust Inc. (1993-present) and Public Service Enterprise
Group, Incorporated (1986-1993). President and Chief
Operating Officer, Enterprise Diversified Holdings,
Incorporated (1989-1993). Senior Executive Vice President
and Chief Financial Officer, Public Service Electric and
Gas Company (1986-1992). Director, First Fidelity Bank,
N.A., N.J. (1984-1991).
13
<PAGE>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- ----------------------------------- -------------- ----------------------------------------------------------
*James M. Oates (50) Trustee Managing Director, Wydown Group (1994-present). Chairman,
Managing Director IBEX Capital Markets LLC (1997-present). Director, Phoenix
The Wydown Group Duff & Phelps Corporation (1995-present).
IBEX Capital Markets LLC Director/Trustee, Phoenix Funds (1987-present). Trustee,
60 State Street Phoenix-Aberdeen Series Fund (1996-present). Director,
Suite 950 Govett Worldwide Opportunity Funds, Inc. (1991-present),
Boston, MA 02109 Blue Cross and Blue Shield of New Hampshire
(1994-present), Investors Financial Service Corporation
(1995-present), Investors Bank & Trust Corporation
(1995-present) and Plymouth Rubber Co. (1995-present).
Director, Stifel Financial (1996-present). Member, Chief
Executives Organization (1996-present). Director/Trustee,
the National Affiliated Investment Companies (until 1993).
Director and President (1984-1994) and Chief Executive
Officer (1986-1994), Neworld Bank.
Richard A. Pavia (66) Trustee Director (1981-present), Chairman and Chief Executive
7145 North Ionia Officer (1989-1994), Speer Financial, Inc. Director, Duff
Chicago, IL 60646 & Phelps Utilities Tax-Free Income Inc. (1991-present),
Duff & Phelps Utility and Corporate Bond Trust Inc.
(1992-present).
*Calvin J. Pedersen (54) Trustee Director and President, Phoenix Duff & Phelps Corporation
Phoenix Duff & Phelps (1995-present). Director/Trustee, Phoenix Funds
Corporation (1995-present). Trustee, Phoenix-Aberdeen Series Fund
55 East Monroe Street (1996-present). President and Chief Executive Officer,
Suite 3600 Duff & Phelps Utilities Tax-Free Income Inc.
Chicago, IL 60603 (1995-present), Duff & Phelps Utilities Income Fund (since
inception), and Duff & Phelps Utility and Corporate Bond
Trust Inc. (1995-present). Director (1986-1995), President
(1993-1995) and Executive Vice President (1992-1993), Duff
& Phelps Corporation.
Philip R. Reynolds (69) Trustee Director/Trustee, Phoenix Funds (1984-present). Trustee,
43 Montclair Drive Phoenix-Aberdeen Series Fund (1996-present). Director,
West Hartford, CT 06107 Vestaur Securities, Inc. (1972-present). Trustee and
Treasurer, J. Walton Bissell Foundation, Inc.
(1988-present). Director/Trustee, the National Affiliated
Investment Companies (until 1993).
Herbert Roth, Jr. (68) Trustee Director/Trustee, Phoenix Funds (1980-present). Trustee,
134 Lake Street Phoenix-Aberdeen Series Fund (1996-present). Director,
P.O. Box 909 Boston Edison Company (1978-present), Phoenix Home Life
Sherborn, MA 01770 Mutual Insurance Company (1972-present), Landauer, Inc.
(medical services) (1970-present), Tech Ops./Sevcon, Inc.
(electronic controllers) (1987-present), Key Energy Group
(oil rig service) (1988-1994), and Mark IV Industries
(diversified manufacturer) (1985-present). Director/
Trustee, the National Affiliated Investment Companies
(until 1993).
Richard E. Segerson (50) Trustee Director/Trustee, Phoenix Funds, (1993-present). Trustee,
102 Valley Road Phoenix-Aberdeen Series Fund (1996-present). Managing
New Canaan, CT 06840 Director, Mullin Associates (1993-present). Vice President
and General Manager, Coats & Clark, Inc. (previously
Tootal American, Inc.) (1991-1993). Director/Trustee, the
National Affiliated Investment Companies (1984-1993).
Lowell P. Weicker, Jr. (65) Trustee Trustee/Director, Phoenix Funds (1995-present). Trustee,
Dresing Lierman Weicker Phoenix-Aberdeen Series Fund (1996-present). Chairman,
6931 Arlington Road Dresing, Lierman, Weicker (1995-present). Director, UST
Suite 501 Inc. (1995-present) and HPSC Inc. (1995-present).
Bethesda, MD 20814 Director, Duty Free International (1997-present). Governor
of the State of Connecticut (1991-1995).
14
<PAGE>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- ----------------------------------- -------------- ----------------------------------------------------------
William J. Newman (57) Senior Vice Executive Vice President (1995-present), Chief Investment
President Strategist (1996-present), Phoenix Investment Counsel,
Inc. Executive Vice President and Chief Investment
Strategist (1996-present), Senior Vice President
(1995-1996), National Securities & Research Corporation.
Senior Vice President, Phoenix Equity Planning Corporation
(1995-1996), Phoenix Strategic Equity Series Fund
(1996-present). The Phoenix Edge Series Fund
(1995-present), Phoenix Multi-Portfolio Fund
(1995-present), Phoenix Income and Growth Fund (1996-
present), Phoenix Series Fund (1996-present). Phoenix
Strategic Allocation Fund, Inc. (1996-present), Phoenix
Worldwide Opportunities Fund (1996-present) and
Phoenix-Aberdeen Series Fund (1996-present). Vice
President, Common Stock and Chief Investment Strategist.
Phoenix Home Life Mutual Insurance Company (April
1995-November 1995). Chief Investment Strategist, Kidder,
Peabody Co., Inc. (1993-1994). Managing Director,
Equities, Bankers Trust Company (1991-1993).
Marvin E. Flewellen (32) Vice President Senior Vice President and Fixed Income Portfolio Manager,
55 East Monroe Street Duff & Phelps Investment Management Co. (1994-present).
Suite 3800 Second Vice President and Portfolio Manager, Northern
Chicago, IL 60603 Trust Bank (1985-1994).
Michael E. Haylon (39) Vice President Director and Executive Vice President--Investments.
Phoenix Duff & Phelps Corporation (1995-present).
Executive Vice President, Phoenix Funds (1993-present) and
Phoenix-Aberdeen Series Fund (1976-present). Director
(1994-present), President (1995-present), Executive Vice
President (1994-1995), Vice President (1991-1994), Phoenix
Investment Counsel, Inc. Director (1994-present),
President (1996-present), Executive Vice President
(1994-1996), Vice President (1993-1994). National
Securities & Research Corporation. Director, Phoenix
Equity Planning Corporation (1995-present). Senior Vice
President, Securities Investments, Phoenix Home Life
Mutual Insurance Company (1993-1995). Various other
positions with Phoenix Home Life Mutual Insurance Company
(1990-1993).
William E. Keen, III (33) Vice President Assistant Vice President, Phoenix Equity Planning
Corporation (1996-present). Vice President, Phoenix Funds,
and Phoenix-Aberdeen Series Fund (1996-present).
Assistant Vice President, USAffinity Funds, USAffinity
Investments LP (1994-1995). Manager, Fund Administration,
SEI Corporation (1991-1994).
Christopher J. Kelleher (41) Vice President Managing Director, Fixed Income (1996-present), Vice
President (1991-1996), Phoenix Investment Counsel, Inc.
and National Securities & Research Corporation. Vice
President, The Phoenix Edge Series Fund (1989-present),
Phoenix Series Fund (1989-present). Portfolio Manager,
Public Bonds, Phoenix Home Life Mutual Insurance Company
(1991-1995).
Thomas S. Melvin, Jr. (53) Vice President Managing Director, Equities (1996-present), Vice President
(1994-1996), Executive Vice President (1992-1994),
Phoenix Investment Counsel, Inc. Managing Director,
Equities (1996-present), Vice President (1994-1996),
Executive Vice President (1993-1994), National Securities
& Research Corporation. Vice President, Phoenix
Multi-Portfolio Fund (1993-present). Portfolio Manager,
Common Stock, Phoenix Home Life Mutual Insurance Company
(1991-1995).
15
<PAGE>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- ----------------------------------- -------------- ----------------------------------------------------------
William R. Moyer (52) Vice President Senior Vice President and Chief Financial Officer, Phoenix
100 Bright Meadow Blvd. Duff & Phelps Corporation (1995-present). Senior Vice
P.O. Box 2200 President, Finance (1990-present), Chief Financial Officer
Enfield, CT 06083-2200 (1996-present), and Treasurer (1994-1996), Phoenix Equity
Planning Corporation. Senior Vice President
(1990-present), Chief Financial Officer (1996-present) and
Treasurer (1994-present), Phoenix Investment Counsel, Inc.
Senior Vice President, Finance (1993-present), Chief
Financial Officer (1996-present), and Treasurer
(1994-present), National Securities & Research
Corporation. Vice President, Phoenix Funds (1990-present)
and Phoenix-Aberdeen Series Fund (1996-present). Senior
Vice President, Finance, Phoenix Securities Group, Inc.
(1993-1995). Senior Vice President and Chief Financial
Officer, W. S. Griffith & Co., Inc. (1992-1995) and
Townsend Financial Advisers, Inc. (1993-1995). Vice
President, the National Affiliated Investment Companies
(until 1993). Vice President, Investment Products Finance,
Phoenix Home Life Mutual Insurance Company (1990-1995).
Scott C. Noble (49) Vice President Director and President, Phoenix Realty Group, Inc.
(1994-present). Senior Vice President, Real Estate,
Phoneix Home Life Mutual Insurance Company (1991-present).
Director and Executive Vice President, Phoenix Real Estate
Securities, Inc. (1993-present). Vice President, Phoenix
Multi-Portfolio Fund (1994-present) and The Phoenix Edge
Series Fund (1995-present). Director (1991-present) and
President (1993-present), Phoenix Founders, Inc. Director,
Phoenix Realty Advisors, Inc. (1991-present). Director,
President and Chief Executive Officer (1994-present),
Phoenix Realty Investors, Inc. Various other positions
with Phoenix Home Life Mutual Insurance Company
(1991-1993).
C. Edwin Riley, Jr. (43) Vice President Managing Director, Equities (1996-present), Vice President
(1995-1996), Phoenix Investment Counsel, Inc. Managing
Director, Equities, National Securities & Research
Corporation (1996-present). Vice President, The Phoenix
Edge Series Fund (1995-present), Phoenix Strategic
Allocation Fund, Inc. (1995-present), Phoenix Series Fund
(1996-present). Director of Equity Management, NationsBanc
(1981-1995).
Barbara Rubin (42) Vice President Vice President (1992-present), Second Vice President
(1986-1992), Real Estate, Phoenix Home Life Mutual
Insurance Company. Vice President, Phoenix Multi-Portfolio
Fund (1994-present) and The Phoenix Edge Series Fund
(1995-present). Vice President (1991-present), 238
Columbus Blvd., Inc. Director (1998-present) and Vice
President (1993-present), Phoenix Founders, Inc. Vice
President Phoenix Real Estate Securities, Inc.
(1993-present). Director and President, Phoenix Realty
Advisors, Inc. (1987-present). President (1995-present),
Executive Vice President (1994-present), Phoenix Realty
Securities, Inc.
Leonard J. Saltiel (45) Vice President Managing Director (1996-present), Senior Vice President
(1994-1996), Phoenix Equity Planning Corporation. Vice
President, Phoenix Funds (1994-present), and Phoenix-Aberdeen
Series Fund (1996-present). Vice President, Investment Operations,
Phoenix Home Life Mutual Insurance Company (1994-1995). Various
positions with Home Life Insurance Company and Phoenix Home Life
Mutual Insurance Company (1987-1994).
Michael Schatt Vice President Vice President of Phoenix Realty Securities, Inc. (1997-present).
Managing Director, Duff & Phelps Investment Management Co. (1994-present).
Portfolio Manager, Duff & Phelps Utility Income Fund (1994-present).
Director, Real Estate Advisory Practice, Coopers & Lybrand, LLC (1990-1994).
16
<PAGE>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- ----------------------------------- -------------- ----------------------------------------------------------
Dorothy J. Skaret (43) Vice President Director, Money Market Trading (1996-present), Vice
President (1991-1996), Phoenix Investment Counsel, Inc.
Director, Money Market Trading (1996-present), Vice
President (1993-1996), National Securities & Research
Corporation. Vice President, The Phoenix Edge Series Fund
(1991-present), Phoenix Series Fund (1990-present),
Phoenix-Aberdeen Series Fund (1996-present) and Phoenix
Realty Securities, Inc. (1995-present). Second Vice
President and Treasurer, Fund Accounting, Phoneix Home
Life Mutual Insurance Company (1994-1995). Various other
positions with Phoenix Home Life Mutual Insurance Company
(1987-1994).
James D. Wehr (39) Vice President Managing Director, Fixed Income (1996-present), Vice
President (1991-1996), Phoenix Investment Counsel, Inc.
Managing Director, Fixed Income (1996-present), Vice
President (1993-1996), National Securities & Research
Corporation. Vice President, Phoenix Multi-Portfolio Fund
(1988-present), Phoenix Series Fund (1990-present), The
Phoenix Edge Series Fund (1991-present), Phoenix
California Tax Exempt Bond Fund, Inc. (1993-present).
Various positions with Phoneix Home Life Mutual Insurance
company (1981-1991).
Nancy G. Curtiss (44) Treasurer Vice President, Fund Accounting (1994-present) and
Treasurer (1996-present), Phoenix Equity Planning
Corporation. Treasurer, Phoenix Investment Counsel, Inc.
and National Securities & Research Corporation
(1996-present). Treasurer, Phoenix Funds (1994-present)
and Phoenix-Aberdeen Series Fund (1996-present). Second
Vice President and Treasurer, Fund Accounting, Phoenix
Home Life Mutual Insurance Company (1994-1995). Various
positions with Phoenix Home Life Insurance Company
(1987-1994).
G. Jeffrey Bohne (49) Secretary Vice President and General Manager, Phoenix Home Life
101 Munson Street Mutual Insurance Co. (1993-present). Vice President,
Greenfield, MA 01301 Transfer Agent Operations, Phoenix Equity Planning
Corporation (1993-present). Secretary, Phoenix Funds
(1993-present). Clerk, Phoenix Strategic Allocation Fund,
Inc. (1994-present). Secretary, Phoenix-Aberdeen Series
Fund (1996-present). Vice President, Home Life of New York
Insurance Company (1984-1992).
</TABLE>
17
<PAGE>
For services rendered to the Fund during the period ended December 31, 1996,
the Trustees received an aggregate of $__ from the Fund as Trustees' fees.
Each Trustee who is not a full-time employee of the Adviser or any of its
affiliates currently receives a retainer at the annual rate of $3,000 and
$500 per meeting. Each Trusteee who serves on a Committee receives a fee of
$250 for each meeting attended. Officers are compensated for their services
by the Adviser and receive no compensation from the Fund. Payments for the
1996 fiscal year are noted below:
Compensation Table
<TABLE>
<CAPTION>
Pension or Total
Retirement Compensation
Benefits From Fund and
Aggregate Accrued Estimated Fund Complex
Compensation as Part of Annual Benefits (11 Funds)
Name From Fund Fund Expenses Upon Retirement Paid to Trustees
-------------------------------------------- ------------------ ------------------------------------------
[to be filed by amendment]
<S> <C> <C> <C> <C>
C. Duane Blinn $ None None $
Robert Chesek None None
E. Virgil Conway None None
William W. Crawford None None
Harry Dalzell-Payne None None
William N. Georgeson None None
Francis E. Jeffries None None
Leroy Keith, Jr. None None
Philip R. McLoughlin None None
Eileen A. Moran None None
Everett L. Morris None None
James M. Oates None None
Richard A. Pavia None None
Calvin J. Pedersen None None
Philip R. Reynolds None None
Herbert Roth, Jr. None None
Richard E. Segerson None None
Lowell P. Weicker, Jr. None None
</TABLE>
ADDITIONAL INFORMATION
Reports to Shareholders
The fiscal year of the Fund ends on December 31. The Fund will send to its
shareholders, at least semi-annually, reports showing the securities of the
Fund's portfolio and other information.
18
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits:
(a) Financial Statements:
Included in Part A of the Registration Statement:
Financial Highlights (not applicable for this filing)
Included in Part B of the Registration Statement:
Independent Auditors' Report (not applicable for this filing)
Statement of Assets and Liabilities
Notes to Financial Statements
(b) Exhibits:
<TABLE>
<S> <C>
(1)(a) Declaration of Trust of the Registrant, filed via Edgar with Pre-Effective Amendment No. 1 on
February 2, 1996 and incorporated herein by reference.
(b) Amendment to Declaration of Trust changing names of Portfolios, filed via Edgar with Pre-Effective
Amendment No. 2 on February 28, 1996 and incorporated herein by reference.
(c) Amendment to Declaration of Trust adding Real Estate Equity Securities Portfolio filed via Edgar herewith.
(2) None
(3) None
(4) Reference is made to Article III, Section 3.4 of Registrant's Declaration of Trust.
(5)(a) Investment Advisory Agreement between Registrant and Duff & Phelps Investment Management Co.
("DPM"), filed via Edgar with Pre-Effective Amendment No. 1 on February 2, 1996 and incorporated
herein by reference.
(b) Investment Advisory Agreement between Registrant and Phoenix Investment Counsel, Inc. ("PIC"),
filed via Edgar with Pre-Effective Amendment No. 1 on February 2, 1996 and incorporated herein by
reference.
(c) Form of Investment Advisory Agreement between Registrant and Phoenix Realty Securities, Inc. ("PRS"), filed
via Edgar herewith.
(6)(a) Distribution Agreement between Registrant and Phoenix Equity Planning Corporation, filed via Edgar
with Pre-Effective Amendment No. 1 on February 2, 1996 and incorporated herein by reference.
(b) Form of Sales Agreement between Phoenix Equity Planning Corporation and dealers, filed via Edgar
with Post-Effective Amendment No. 1 on March 1, 1996 and incorporated herein by reference.
(7) None
(8)(a) Custodian Agreement between Registrant and State Street Bank and Trust Company, filed via Edgar
with Pre-Effective Amendment No. 1 to the Registration Statement/Proxy Statement on Form N-14 on
June 3, 1996 and incorporated herein by reference.
(b) Custodian Agreement between Registrant and The Chase Manhattan Bank, N.A., filed via Edgar with
Pre-Effective Amendment No. 2 on February 28, 1996 and incorporated herein by reference.
(9)(a) Financial Agent Agreement between Registrant and Phoenix Equity Planning Corporation, filed via
Edgar with Pre-Effective Amendment No. 1 on February 2, 1996 and incorporated herein by reference.
(b) Transfer Agent and Service Agreement between Registrant and Phoenix Equity Planning Corporation,
filed via Edgar with Pre-Effective Amendment No. 2 on February 28, 1996 and incorporated herein by
reference.
(c) Form of Administration Agreement between Registrant (on behalf of Real Estate Portfolio) and Phoenix Duff &
Phelps Corporation, filed via Edgar herewith.
(d) Financial Agent Agreement between Registrant and Phoenix Equity Planning Corporation to be filed by amendment.
(10) Opinion of Counsel, filed via Edgar with Pre-Effective Amendment No. 2 on February 28, 1996 and
incorporated herein by reference.
(11) Consent of Accountants, filed via Edgar with Post-Effective No. 1 on March 1, 1996 and incorporated
herein by reference.
C-1
<PAGE>
(12) None
(13) Initial Capitalization Agreement, filed via Edgar with Pre-Effective Amendment No. 1 on February 2,
1996 and incorporated herein by reference.
(14) None
(15) Rule 12b-1 Distribution Plan for Class Y Shares, filed via Edgar with Pre-Effective Amendment No. 1
on February 2, 1996 and incorporated herein by reference.
(16) Schedule for Computation of Performance Quotations, filed via Edgar with Pre-Effective Amendment
No. 2 on February 28, 1996 and incorporated herein by reference.
(17) Financial Data Schedule, reflected on Edgar as Exhibit 27, filed with Post-Effective Amendment No.
1 on March 1, 1996 and incorporated herein by reference.
(18) Rule 18f-3 Dual Distribution Plan, filed via Edgar with Pre-Effective Amendment No. 2 on February
28, 1996 and incorporated herein by reference.
(19)(a) Powers of Attorney, filed via Edgar with Pre-Effective Amendment No. 2 on February 28, 1996 and
incorporated herein by reference.
(b) Power of Attorney for Ms. Moran, filed via Edgar herewith.
</TABLE>
Item 25. Persons Controlled by or under Common Control with Registrant.
As of the date hereof, to the best knowledge of the Registrant, no person is
directly or indirectly controlled by or under common control with the
Registrant.
Item 26. Number of Holders of Securities.
As of December 31, 1996: Class X Shares Class Y Shares
Number of Number of
Record Holders Record Holders
--------------- ---------------
Balanced Portfolio 78 55
Enhanced Reserves Portfolio 28 4
Growth Portfolio 88 65
Managed Bond Portfolio 56 43
Money Market Portfolio 52 31
Real Estate Equity Securities Portfolio 0 0
U.S. Government Securities Portfolio 29 20
Item 27. Indemnification.
Please see Article of the Registrant's Declaration of Trust (incorporated
herein by reference). Registrant's trustees and officers are covered by an
Errors and Omissions Policy. Paragraph 10 of the Investment Advisory
Agreements between the Registrant and its Advisers provide in relevant part
that, in the absence of willful malfeasance, bad faith, gross negligence or
reckless disregard of the obligations or duties under the Investment Advisory
Agreements on the part of each the Adviser, the Advisers shall not be liable
to the Registrant or to any shareholder for any act or omission in the course
of or connected in any way with rendering services or for any losses that may
be sustained in the purchase, holding or sale of any security.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to trustees, directors, officers and controlling
persons of the Registrant and the investment advisers and distributor
pursuant to the foregoing provisions or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of
expenses incurred or paid by a trustee, director, officer, or controlling
person of the Registrant and the principal underwriter in connection with the
successful defense or any action, suit or proceeding) is asserted against the
Registrant by such trustee, director, officer or controlling person or the
Distributor in connection with the shares being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
Item 28. Business and Other Connections of Investment Adviser.
See "Management of the Fund" in the Prospectus and "Management of the Trust"
in the Statement of Additional Information for information regarding the
business of the Advisers. For information as to the business, profession,
vocation or employment of a substantial nature of directors and officers of
the Advisers, reference is made to the Advisers' current Form ADV (SEC File
Nos. 801-5995 (PIC), 801-48190 (PRS) and 801-14813 (DPM)) filed under the
Investment Advisers Act of 1940, incorporated herein by reference.
Item 29. Principal Underwriter.
(a) See "Distribution Plan" and "How to Buy Shares" in the Prospectus and
"Distributor" and "Distribution Plan" in the Statement of Additional
Information, both of which are included in this post-effective amendment
to the registration statement.
(b) The directors and executive officers of Phoenix Equity Planning
Corporation, the distributor for Registrant, are as follows:
C-2
<PAGE>
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
----------------------------- ---------------------------------- ------------------------------
<S> <C> <C>
Michael E. Haylon Director Executive Vice President
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
Philip R. McLoughlin Director and President Trustee and President
One American Row
Hartford, CT 06115
David R. Pepin Director and None
56 Prospect Street Executive Vice President,
P.O. Box 150480 Mutual Fund Sales
Hartford, CT 06115-0480 and Operations
Leonard J. Saltiel Managing Director, Vice President
100 Bright Meadow Blvd. Operations and Service
P.O. Box 2200
Enfield, CT 06083-2200
Paul A. Atkins Senior Vice President and None
56 Prospect Street Sales Manager
P.O. Box 150480
Hartford, CT 06115-0480
Maris Lambergs Senior Vice President, None
100 Bright Meadow Blvd. Insurance and
P.O. Box 2200 Independent Division
Enfield, CT 06083-2200
William R. Moyer Senior Vice President, Vice President
100 Bright Meadow Blvd. and Chief Financial Officer
P.O. Box 2200
Enfield, CT 06083-2200
John F. Sharry Managing Director, None
100 Bright Meadow Blvd. Mutual Fund Distribution
P.O. Box 1900
Enfield, CT 06083-1900
G. Jeffrey Bohne Vice President, Secretary
100 Bright Meadow Blvd. Mutual Fund
P.O. Box 2200 Customer Service
Enfield, CT 06083-2200
Eugene A. Charon Vice President and None
100 Bright Meadow Blvd. Controller
P.O. Box 2200
Enfield, CT 06083-2200
Nancy G. Curtiss Vice President and Treasurer, Treasurer
56 Prospect Street Fund Accounting
P.O. Box 150480
Hartford, CT 06115-0480
William E. Keen III Assistant Vice President, Vice President
100 Bright Meadow Blvd. Mutual Fund Regulation
P.O. Box 1900
Enfield, CT 06083-1900
C-3
<PAGE>
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
----------------------------- ---------------------------------- ------------------------------
Elizabeth R. Sadowinski Vice President, None
100 Bright Meadow Blvd. Administration
P.O. Box 2200
Enfield, CT 06083-2200
Thomas N. Steenburg Vice President, Assistant Secretary
56 Prospect Street Counsel and Secretary
P.O. Box 150480
Hartford, CT 06115-0480
</TABLE>
(c) Name of Principal Net Underwriting Compensation Brokerage Other
Underwriter Discounts and on Redemption Commissions Compensation
Commissions and Repurchase
--------------------------------------------------------------------------
Equity Planning $ $ $ $
--------------------------------------------------------------------------
[to be filed by amendment]
Item 30. Location of Accounts and Records.
All accounts, books and other documents required to be maintained by the
Registrant by Section 31(a) of the Investment Company Act of 1940 and the
Rules thereunder will be maintained at the offices of the Registrant located
at 56 Prospect Street, Hartford, CT 06115, or its investment advisers, Duff &
Phelps Investment Management Co., 55 East Monroe Street, Suite 3800, Chicago,
Illinois 60610, Phoenix Investment Counsel, Inc., 56 Prospect Street,
Hartford, CT 06115, Phoenix Realty Securities, Inc. 38 Prospect Street,
Hartford, CT 06115, or the custodians, State Street Bank and Trust Company, 1
Heritage Drive, P2N, North Quincy, MA 02171 or The Chase Manhattan Bank,
N.A., 1 Chase Manhattan Plaza, Floor 3B, New York, NY 10081. All such
accounts, books and other documents required to be maintained by the
principal underwriter will be maintained at Phoenix Equity Planning
Corporation, 100 Bright Meadow Boulevard, Enfield, Connecticut 06083.
Item 31. Management Services.
None.
Item 32. Undertakings.
(a) Not applicable.
(b) Registrant undertakes to file a post-effective amendment using financial
statements, which need not be certified, within four to six months from
the effective date of Registrant's Post-Effective Amendment No. 4 with
respect to the Real Estate Equity Securities Portfolio.
(c) Registrant undertakes to furnish to each person to whom a prospectus is
delivered a copy of the Registrant's latest annual report to
shareholders upon request and without charge if the information called
for by Item 5A of Form N-1A is contained in such annual report.
(d) Registrant undertakes to provide the information specified pursuant to
Regulation S-K, Item 512 (Reg.S.S. 229.512), as applicable, the terms of
which are incorporated herein by reference.
(e) Registrant undertakes to call a special meeting of shareholders for the
purpose of voting upon the question of removal of a trustee or trustees
and to assist in communications with other shareholders, as required by
Section 16(c) of the 1940 Act, if requested to do so by holders of at
least 10% of a Portfolio's outstanding shares.
C-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment
to its Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of Hartford, and State of Connecticut on
the 11th day of February, 1997.
PHOENIX DUFF & PHELPS
INSTITUTIONAL MUTUAL FUNDS
ATTEST: /s/ Thomas N. Steenburg By: /s/ Philip R. McLoughlin
Thomas N. Steenburg Philip R. McLoughlin
Assistant Secretary President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following persons
in the capacities indicated, on this 11th day of February, 1997.
Signature Title
----------------------------------------------------------------
C. Duane Blinn* Trustee
Robert Chesek* Trustee
E. Virgil Conway* Trustee
William W. Crawford* Trustee
Nancy G. Curtiss* Treasurer (principal
financial and
accounting officer)
Harry Dalzell-Payne* Trustee
William N. Georgeson* Trustee
Francis E. Jeffries* Trustee
S-1
<PAGE>
Signature Title
----------------------------------------------------------------
Leroy Keith, Jr.* Trustee
/s/ Philip R. McLoughlin Trustee and President
Philip R. McLoughlin (principal executive officer)
Eileen A. Moran* Trustee
Everett L. Morris* Trustee
James M. Oates* Trustee
Richard A. Pavia* Trustee
Calvin J. Pedersen* Trustee
Philip R. Reynolds* Trustee
Herbert Roth, Jr.* Trustee
Richard E. Segerson* Trustee
Lowell P. Weicker, Jr.* Trustee
By: /s/ Philip R. McLoughlin
*Philip R. McLoughlin pursuant to powers of attorney filed with
Pre-Effective Amendment No. 2 on February 28, 1996 and incorporated
herein by reference.
S-2
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
Second Amendment to Declaration of Trust
The undersigned, individually as Trustees of Phoenix Duff & Phelps
Institutional Mutual Funds, a Massachusetts business trust organized under a
Declaration of Trust dated December 4, 1995, as amended February 26, 1996, (the
"Trust"), and as attorney-in-fact for each of the other Trustees of the Trust
pursuant to a certain Delegation and Power of Attorney dated August 21, 1996,
executed by each of such Trustees, a copy of which is attached hereto, do hereby
certify that at a duly held meeting of the Board of Trustees, acting pursuant to
ARTICLE VI Section 3 of said Declaration of Trust for the purpose of
establishing and designating a new Series of Shares denominated the "Real Estate
Equity Securities Portfolio," unanimously voted to amend said Trust, effective
upon filing with the Commonwealth of Massachusetts, by deleting the first
paragraph of Section 3 of ARTICLE III thereof and by inserting in lieu of such
paragraph the following paragraph:
"Without limiting the authority of the Trustees set forth in Section
3.1 to establish and designate any further Series, the following seven
Series are hereby established and designated: "Phoenix Duff & Phelps
Institutional Balanced Portfolio", "Phoenix Duff & Phelps Institutional
Managed Bond Portfolio", "Phoenix Duff & Phelps Institutional Enhanced
Reserves Portfolio", "Phoenix Duff & Phelps Institutional Growth Stock
Portfolio", "Phoenix Duff & Phelps Institutional Money Market
Portfolio", "Phoenix Real Estate Equity Securities Portfolio" and
"Phoenix Duff & Phelps Institutional U.S. Government Securities
Portfolio".
WITNESS our hands this 28th day of August, 1996.
---------------------------------
Philip R. McLoughlin, individually and as attorney-in-fact
for C. Duane Blinn, Robert Chesek, E. Virgil Conway, William
W. Crawford, Harry Dalzell-Payne, William N. Georgeson,
Francis E. Jeffries, Leroy Keith, Jr., Everett L. Morris,
James M. Oates, Richard A. Pavia, Calvin J. Pedersen, Philip
R. Reynolds, Herbert Roth, Jr., Richard E. Segerson, and
Lowell P. Weicker, Jr.
Exhibit 5(c)
FORM OF INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT made effective as of the ___ day of April, 1997 by and
between Phoenix Duff & Phelps Institutional Mutual Funds (the "Trust"), a
Massachusetts business trust authorized to issue share of beneficial interest
in separate series, and Phoenix Realty Securities, Inc. (the "Adviser"),
a Connecticut corporation.
WITNESSETH THAT:
1. The Trust hereby appoints the Adviser to act as investment adviser to
the Trust on behalf of the Phoenix Real Estate Equity Securities Portfolio (the
"Portfolio" or "Series"), for the period and on the terms set forth herein. The
Adviser accepts such appointment and agrees to render the services described in
this Agreement for the compensation herein provided.
2. In the event that the Trustees desire to retain the Adviser to render
investment advisory services hereunder with respect to one or more additional
series ("Additional Portfolio"), the Trust shall notify the Adviser in writing.
If the Adviser is willing to render such services, it shall notify the Trust in
writing, whereupon such Additional Portfolio shall become subject to the terms
and conditions of this Agreement.
3. The Adviser shall furnish continuously an investment program for the
Portfolio and any Additional Portfolio which may become subject to the terms and
conditions set forth herein (which, together with the Portfolio is sometimes
collectively referred to as the "Portfolio") and shall manage the investment
and reinvestment of the assets of each Portfolio, subject at all times to the
supervision of the Trustees.
4. With respect to managing the investment and reinvestment of the
Portfolio's assets, the Adviser shall provide, at its own expense:
(a) Investment research, advice and supervision;
(b) An investment program for each Portfolio consistent with its
investment objectives;
(c) Implementation of the investment program for each Portfolio including
the purchase and sale of securities;
(d) Regular reports to the Trustees on the implementation of each
Portfolio's investment program; and
(e) Continuous monitoring and evaluation of the performance and investment
style of any subadviser recommended by Adviser and appointed to act on
behalf of the Trust.
<PAGE>
-2-
5. The adviser shall, for all purposes herein, be deemed to be an
independent contractor.
6. The Adviser shall furnish at its own expense, or pay the expenses of the
Trust, for the following:
(a) Office facilities, including office space, furniture and equipment;
(b) Personnel necessary to perform the functions required to manage the
investment and reinvestment of each Portfolios' assets (including those
required for research, statistical and investment work);
(c) Personnel to serve without salaries from the Trust as officers or
agents of the Trust. The Adviser need not provide personnel to perform,
or pay the expenses of the Trust for, services customarily performed
for an open-end management investment company by its national
distributor, custodian, financial agent, transfer agent, auditors and
legal counsel;
(d) compensation and expenses, if any, of the Trustees who are also
full-time employees of the Adviser or any of its affiliates; and
(e) Any subadviser recommended by Adviser and appointed to act on behalf
of the Trust.
7. All costs and expenses not specifically enumerated herein as payable
by the Adviser shall be paid by the Trust. Such expenses shall include, but
shall not be limited to, all expenses (other than those specifically referred to
as being borne by the Adviser) incurred in the operation of the Trust and any
public offering of its shares, including, among others, interest, taxes,
brokerage fees and commissions, fees of Trustees who are not full-time employees
of the Adviser or any of its affiliates, expenses of Trustees' and shareholders'
meetings including the cost of printing and mailing proxies, certain expenses of
insurance premiums for fidelity and other coverage, expenses of repurchase and
redemption of shares, expenses of issue and sale of shares (to the extent not
borne by its national distributor under its agreement with the Trust), expenses
of printing and mailing stock certificates representing shares of the Trust,
association membership dues, charges of custodians, transfer agents, dividend
disbursing agents and financial agents, bookkeeping, auditing and legal
expenses. The Trust will also pay the fees and bear the expense of registering
and maintaining the registration of the Trust and its shares with the Securities
and Exchange Commission and registering or qualifying its shares under state or
other securities laws and the expense of preparing and mailing prospectuses and
reports to shareholders. Additionally, if authorized by the Trustees, the Trust
shall pay for extraordinary expenses and expenses of a non-recurring nature
which may include, but not be limited to the reasonable and proportionate cost
of any reorganization or acquisition of assets and the cost of legal proceedings
to which the Trust is a party.
<PAGE>
-3-
8. Adviser hereby undertakes to abide by policies and procedures adopted
by the Trust.
9. For providing the services and assuming the expenses outlined herein,
the Trust agrees that the Adviser shall be compensated as follows:
(a) Within five days after the end of each month, the Trust shall pay the
Adviser a basic fee based on the annual rate of .45% of the average
aggregate daily net asset values of the Portfolio. The amounts
payable to the Adviser with respect to the Portfolio shall be based
upon the average of the values of the net assets of such Portfolio as
of the close of business each day, computed in accordance with the
Declaration of Trust.
(b) The basic monthly advisory fee payable to the Adviser described in
paragraph (a), above, shall be subject to a performance adjustment
based upon the Portfolio's Class X Share annual performance as compared
to the following benchmark or such other reference index as the parties
shall agree from time to time. The basic monthly fee will therefore
increase or decrease by .005% for every .10% after the first .50% in
which Portfolio Class X Share performance on a rolling annual basis is
higher or lower than that of the NAREIT Equity Total Return Index. In
no event will the increase or decrease in any one annual period exceed
.15%. The annual reference period shall commence upon the effective
date hereof and terminate on each annual anniversary thereafter. The
performance fee shall be computed and be payable within thirty (30)
days subsequent to each of the aforedescribed anniversary dates.
(c) Compensation shall accrue immediately upon the effective date of this
Agreement.
(d) If there is termination of this Agreement during a month, each
Portfolio fee for that month shall be proportionately computed upon the
average of the daily net asset values of such Portfolio for such
partial period in such month.
(e) The Adviser agrees to reimburse the Trust for the amount, if any, by
which the total operating and management expenses for any Portfolio
(including the Adviser's compensation, pursuant to this paragraph, but
excluding taxes, interest, costs of portfolio acquisitions and
dispositions and extraordinary expenses), for any "fiscal year" exceed
the level of expenses which such Portfolio is permitted to bear under
the most restrictive expense limitation (which is not waived by a
State) imposed on open-end investment companies by any state in which
shares of such Portfolio are then qualified. Such reimbursement, if
any, will be made by the Adviser to the Trust within five days after
the end of each month. For the purpose of this subparagraph (d), the
term "fiscal year" shall include the portion of the then current fiscal
year which shall have elapsed at the date of termination of this
Agreement.
10. The services of the Adviser to the Trust are not to be deemed
exclusive, the Adviser being free to render services to others and to engage in
other activities. Without relieving the Adviser of its duties hereunder and
subject to the prior approval of the Trustees and subject further to compliance
with applicable provisions of the Investment Company Act of 1940, as amended,
the Adviser may appoint one or more agents to perform any of the functions and
services which are to be provided under the terms of this Agreement upon such
terms and conditions as may be mutually agreed upon among the Trust, the Adviser
and any such agent.
11. The Adviser shall not be liable to the Trust or to any shareholder of
the Trust for any error of judgment or mistake of law or for any loss suffered
by the Trust or by any shareholder of
<PAGE>
-4-
the Trust in connection with the matters to which this Agreement or any
Subadvisory Agreement relates, except a loss resulting from willful misfeasance,
bad faith, gross negligence or reckless disregard on the part of the Adviser in
the performance of its duties hereunder.
12. It is understood that:
(a) Trustees, officers, employees, agents and shareholders of the Trust
are or may be "interested persons" of the Adviser or any subadviser as
directors, officers, stockholders or otherwise;
(b) Directors, officers, employees, agents and stockholders of the Adviser
or any subadviser are or may be "interested persons" of the Trust as
Trustees, officers, shareholders or otherwise; and
(c) The existence of any such dual interest shall not affect the validity
hereof or of any transactions hereunder.
13. This Agreement shall become effective with respect to the Portfolio as
of the date stated above (the "Contract Date") and with respect to any
Additional Portfolio, on the date specified in the notice to the Trust from the
Adviser in accordance with paragraph 2 hereof that the Adviser is willing to
serve as Adviser with respect to such Additional Portfolio. Unless terminated as
herein provided, this Agreement shall remain in full force and effect for a
period of one year following the Contract Date, and, with respect to each
Additional Portfolio, until the next anniversary of the Contract Date on which
such Additional Portfolio became subject to the terms and conditions of this
Agreement and shall continue in full force and effect for periods of one year
thereafter with respect to each Portfolio so long as (a) such continuance with
respect to any such Portfolio is approved at least annually by either the
Trustees or by a "vote of the majority of the outstanding voting securities" of
such Portfolio and (b) the terms and any renewal of this Agreement with respect
to any such Portfolio have been approved by a vote of a majority of the Trustees
who are not parties to this Agreement or "interested persons" of any such party
cast in person at a meeting called for the purpose of voting on such approval;
provided, however, that the continuance of this Agreement with respect to each
Additional Portfolio is subject to its approval by a "vote of a majority of the
outstanding voting securities" of any such Additional Portfolio on or before the
next anniversary of the Contract Date following the date on which such
Additional Portfolio became a Portfolio hereunder.
Any approval of this Agreement by a vote of the holders of a "majority of
the outstanding voting securities" of any Portfolio shall be effective to
continue this Agreement with respect to such Portfolio notwithstanding (a) that
this Agreement has not been approved by a "vote of a majority of the outstanding
voting securities" of any other Portfolio of the Trust affected thereby and (b)
that this Agreement has not been approved by the holders of a "vote of a
majority of the outstanding voting securities" of the Trust, unless either such
additional approval shall be required by any other applicable law or otherwise.
<PAGE>
-5-
14. The Trust may terminate this Agreement with respect to the Trust or to
the Portfolio upon 60 days' written notice to the Adviser at any time, without
the payment of any penalty, by vote of the Trustees or, as to each Portfolio, by
a "vote of the majority of the outstanding voting securities" of such Portfolio.
The Adviser may terminate this Agreement upon 60 days' written notice to the
Trust, without the payment of any penalty. This Agreement shall immediately
terminate in the event of its "assignment".
15. The terms "majority of the outstanding voting securities", "interested
persons" and "assignment", when used herein, shall have the respective meanings
in the Investment Company Act of 1940, as amended.
16. In the event of termination of this Agreement, or at the request of
the Adviser, the Trust will eliminate all reference to "Phoenix" or "Phoenix
Duff & Phelps" from its name, and will not thereafter transact business in a
name using the word "Phoenix" or "Phoenix Duff & Phelps" in any form or
combination whatsoever, or otherwise use the word "Phoenix" or "Phoenix Duff &
Phelps" as part of its name. The Trust will thereafter in all prospectuses,
advertising materials, letterheads, and other material designed to be read by
investors and prospective investors delete from its name the word "Phoenix" or
"Phoenix Duff & Phelps" or any approximation thereof. If the Adviser chooses to
withdraw the Trust's right to use the word "Phoenix" or "Phoenix Duff & Phelps",
it agrees to submit the question of continuing this Agreement to a vote of the
Trust's shareholders at the time of such withdrawal.
17. It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust personally, but bind only the trust property of
the Trust, as provided in the Declaration of Trust. The execution and delivery
of this Agreement have been authorized by the Trustees and shareholders of the
Trust and signed by the President of the Trust, acting as such, and neither such
authorization by such Trustees and shareholders nor such execution and delivery
by such officer shall be deemed to have been made by any of them individually or
be binding upon or impose any liability on any of them personally, but shall
bind only the trust property of the Trust as provided in its Declaration of
Trust. The Declaration of Trust, as amended, is or shall be on file with the
Secretary of The Commonwealth of Massachusetts.
18. This Agreement shall be construed and the rights and obligations of the
parties hereunder enforced in accordance with the laws of The Commonwealth of
Massachusetts.
<PAGE>
-6-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first
written above.
PHOENIX DUFF & PHELPS
INSTITUTIONAL MUTUAL FUNDS
By: _________________________________
Philip R. McLoughlin, President
PHOENIX REALTY SECURITIES, INC.
By: _________________________________
Barbara Rubin, President
Exhibit 9(c)
FORM ADMINISTRATION AGREEMENT
AGREEMENT made effective the ________ day of _____________, 1997, by and
between PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS, a Massachusetts
business trust with an office in Greenfield, Massachusetts, (the "Trust") and
DUFF & PHELPS INVESTMENT MANAGEMENT CO., an Illinois corporation with an office
and principal place of business in Chicago, Illinois (the "Administrator").
WITNESSETH:
WHEREAS, the Trust is an open-end, diversified management company duly
registered under the Investment Company Act of 1940, as amended; and
WHEREAS, the Trust requires certain administrative services to be performed
on an ongoing basis on behalf of Phoenix Real Estate Equity Securities Portfolio
(the "Portfolio") and the Administrator is in a position to provide such
services:
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein the parties hereto agree as follows:
1. Appointment.
Trust hereby engages and appoints Administrator, and Administrator hereby
accepts such appointment, to perform the services hereafter set forth.
2. Services.
Subject to all direction and control of the Board of Trustees of the Trust,
Administrator shall (a) advise and assist on the general operations of the
Portfolio; (b) assist in maintaining office facilities (which may be in the
offices of Administrator or an affiliate but shall be in such location as
Administrator and Trust shall reasonably determine; (c) furnish clerical
services, office supplies and stationery; (d) monitor and make recommendations
concerning fidelity bond coverage for the Portfolio; (e) monitor compliance with
the policies and limitations of the Portfolio as set forth in the Portfolio's
Prospectus, Statement of Additional Information, and Trust's Declaration of
Trust, provided, however, that the Portfolio's investment adviser shall remain
responsible for such compliance responsibilities; and (f) prepare and/or
coordinate all material for the Board of Trustees meetings. In providing such
services Administrator shall be responsible for all compensation and expenses of
employees, agents and consultants employed or retained for such purpose, but in
no
<PAGE>
event shall Administrator be responsible for compensation or expenses of the
Portfolio's investment adviser, transfer agent, distributor, or financial agent.
3. Compensation. In consideration of the services provided hereunder the Trust
shall pay Administrator a fee, computed daily and payable monthly, at the annual
rate of .15% of the average daily net assets of the Portfolio.
4. Proprietary and Confidential Information. Administrator agrees on behalf of
itself and its employees, agents and consultants to treat confidentially and as
proprietary information of the Trust all records and other information relating
to such Portfolio (and to its shareholders) and not to use such records and
information for any purpose other than performance of services hereunder without
the prior written consent of the Trust.
5. Limitation of Liability. Administrator shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Trust in connection
with the matters to which this Agreement applies, except for such loss as
results from willful malfeasance, bad faith or gross negligence on
Administrator's part in the performance of its duties under this Agreement.
Administrator shall look only to the assets of the Trust for satisfaction of the
Trust's obligations under this Agreement, and neither the Trust's shareholders
nor the Trustees, nor any of the Trust's officers, employees, agents or
consultants, whether past, present or future, shall be personally liable
therefor or for any liability under this Agreement. This Agreement has been made
by, and on behalf of, the Trust, and the obligations of the Trust under this
Agreement are not binding upon the Trustees, shareholders or officers,
employees, agents or consultants of the Trust, but are binding only upon the
assets and property of the Trust.
6. Non-Recourse. Reference is hereby made to the Declaration of Trust dated
December 4, 1995, a copy of which has been filed with the Secretary of the
Commonwealth of Massachusetts and elsewhere as required by law, and to
any and all amendments thereto so filed. The name Phoenix Duff & Phelps
Institutional Mutual Funds refers to the Trustees under said Declaration of
Trust, as Trustees and not personally, and no Trustee, shareholder, officer,
agent or employee of the Trust shall be held to any personal liability in
connection with the affairs of the Trust; only the trust estate under said
Declaration of Trust is liable. Without limiting the generality of the
foregoing, neither the Administrator nor any of its officers, directors,
partners, shareholders or employees shall, under any circumstances, have
recourse or cause or willingly permit recourse to be had directly or indirectly
to any personal, statutory, or other liability of any shareholder, Trustee,
officer, agent or employee of the Trust or of any successor of the Trust,
whether such liability now exists or is hereafter incurred for claims against
the trust estate.
<PAGE>
7. Duration and Termination. This Agreement shall become effective as of the
date hereof and shall continue in effect from year to year thereafter unless
sooner terminated as hereinafter provided, provided such continuance is
specifically approved at least annually by the Trust's Board of Trustees
including a majority of the Trust's trustees who are not interested persons (as
defined in the Investment Company Act of 1940, as amended) or by vote of a
majority of the outstanding voting securities of the Trust. This Agreement shall
automatically terminate upon its assignment and may be terminated by the Trust
at any time upon not less than sixty (60) days written notice to Administrator.
This Agreement shall be terminable by Administrator at any time upon not less
than sixty (60) day's written notice to the Trust (which notice may be waived by
the Trust).
8. Governing Law. This Agreement shall be governed by and construed according to
the laws of the State of Illinois without reference to its rules regarding
choice or conflict of laws.
IN WITNESS WHEREOF, the parties have hereunto caused these presents to
be executed as of the day and year first above written.
PHOENIX DUFF & PHELPS INSTITUTIONAL
MUTUAL FUNDS
By: ________________________________
DUFF & PHELPS INVESTMENT
MANAGEMENT CO.
By: ________________________________
Exhibit 19(b)
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix Duff & Phelps
Institutional Mutual Funds, hereby constitute and appoint Philip R. McLoughlin
and Thomas N. Steenburg, or either of them as my true and lawful attorneys and
agents with full power to sign for me in the capacity indicated below, any or
all Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Duff & Phelps Institutional Mutual
Funds, and hereby ratify and confirm my signature as it may be signed by said
attorneys and agents.
WITNESS my hand and seal on the date set forth below.
November 20, 1996 /s/ Eileen A. Moran
----------------------------
Trustee
